Premium
Toward an Optimal Asset Allocation for Charitable Remainder Trusts
Author(s) -
Delorme Luke F.,
St. Peter David F.
Publication year - 2016
Publication title -
nonprofit management and leadership
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.844
H-Index - 54
eISSN - 1542-7854
pISSN - 1048-6682
DOI - 10.1002/nml.21227
Subject(s) - remainder , asset allocation , asset (computer security) , actuarial science , investment (military) , economics , business , financial economics , econometrics , finance , computer science , political science , portfolio , arithmetic , mathematics , computer security , politics , law
Economic theory, relevant research, and a Monte Carlo model are used to develop investment guidelines for charitable remainder unitrusts ( CRUTs ). Investment for CRUTs should involve a significant share of equities, with as much as 70 percent allocated to equities for long‐term CRUTs . Adjusting allocations as payout beneficiaries get older is unnecessary given the nature of CRUTs , donors, and simulated outcomes. The authors propose that a fixed asset allocation be used instead of one that changes over time and that CRUTs with higher payouts should use a more aggressive asset allocation (more equities).