Payments from trusts like this are made in one of two ways: For as long as the trust lasts, a fixed amount may be received each year—in effect, a guaranteed income. Such a trust is called an Annuity Trust.
Or a specified percentage of the trust’s value, recomputed annually, may be paid each year. In each year, if assets increase in value, payments would also increase. This type of trust is called a Unitrust.
The tax laws require that the fixed amount to be paid out each year equal at least 5% of the initial value of the property placed in the annuity trust (it can be higher, but not lower); or at least 5% of the annual value of the trust assets in the case of a unitrust.