Total Return Unitrust

What Does Total Return Unitrust Mean?

A total return unitrust is a method of managing trust assets where the distribution of proceeds is divided between the intermediary beneficiary and the remainder beneficiaries. The trustee allocates a fixed percentage of the total assets of the trust, which is then distributed among the beneficiaries.

Insuranceopedia Explains Total Return Unitrust

In the past, trust accounts often led to conflicts among beneficiaries. The intermediary beneficiary sought to maximize income from the trust’s assets, as that was how they monetized their share. On the other hand, the remaining beneficiaries focused on growing the assets of the trust, as their share depended on the trust’s growth.

With a total return unitrust, this conflict can be mitigated or even resolved by assigning a fixed percentage for all beneficiaries. The amount distributed to each beneficiary is based on the fair market value of the trust’s assets. If the market performs well, beneficiaries receive a higher distribution; if the market is unfavorable, they receive less.