Net Income Make-up Charitable Remainder Unitrusts (NIMCRUTS)
Definition of "Net income make-up charitable remainder unitrusts (NIMCRUTS)"
Type of charitable remainder trust (CRT) that pays interest income for life or for a specified term to a non charitable beneficiary. The remainder of the interest is received by a charity. This trust pays a specified percentage of its fair market value with the beneficiary receiving only the interest and dividends earned by the trust for the current year. The trust does not pay out any unrealized income. If this payout of interest and dividends is less than the specified percentage as stated in the trust documents, the shortage is accumulated and paid to the beneficiary at some future date (the net income make-up provision goes into effect). For example, assume that the trust earns 6% in interest and 16% in unrealized capital gains during the current year. The beneficiary receives only the 6% earned interest with the 16% in unrealized capital gains being accumulated for distribution to the beneficiary at a future date when the recognized income in the trust is sufficient to affect the payout. In those situations where the trust has no income from interest and dividends, the shortage owed to the beneficiary is accumulated for future distribution to that beneficiary.
Popular Insurance Terms
Provision used to avoid duplication of coverage in other policies; to eliminate coverage for property under the care, custody, and control of an insured business; as well as to avoid ...
Investment risk associated with the possibility that there is a rise in the interest rates after a fixed income security has been purchased resulting in a decline in that security's price. ...
same as term Lost Policy Receipt: life insurance company form to be signed by a policyholder who wishes to surrender a policy that has been lost. The signed receipt then becomes evidence ...
Charging the insured an amount that is above the actual premium required for placing and maintaining the policy in force. ...
Same as term Excess of Loss Reinsurance: method whereby an insurer pays the amount of each claim for each risk up to a limit determined in advance and the reinsurer pays the amount of the ...
Type of accounting method, in life insurance, designed to match revenues and expenses of an insurer according to principles designed by the Financial Accounting Standards Board and the ...
Agreement by the insured that, simply because the insurer investigates and determines a value for the claim, the insurer does not admit liability for the claim. ...
Branch of knowledge dealing with the mathematics of insurance, including probabilities. It is used in ensuring that risks are carefully evaluated, that adequate premiums are charged for ...
Interest earned on dividends from a participating life insurance policy left on deposit with the insurance company and subject to taxation. ...
Have a question or comment?
We're here to help.