Who benefits from a charitable remainder trust when it comes to income distribution?

A charitable remainder trust (CRT) is designed primarily to provide income to specific beneficiaries over a defined period, after which the remaining assets go to a designated charity. In the context of income distribution, the correct aspect is that the beneficiaries receive income based on fixed percentages.

This structure allows for a predetermined percentage of the trust's value to be distributed to the beneficiaries, which can provide them with a steady and reliable income stream. The fixed percentages ensure that the distribution is calculable and can be planned for at the inception of the trust, aligning with the financial needs of the beneficiaries. This arrangement is advantageous as it enables beneficiaries to benefit from the income while also contributing to charitable causes in a structured way that ultimately supports the charity after the trust's term ends.

In terms of the other options, while the charitable organization does receive the remainder of the trust's assets upon termination, they do not receive all income during the lifetime of the trust. Furthermore, the grantor may not solely benefit from the trust, as the income distribution is allocated to the beneficiaries instead. Lastly, the trust typically does have certain tax obligations, especially regarding the income generated, rather than being entirely tax-exempt.