Actually merging the CRUTs to form a single entity is likely not possible. The terms of the two CRUTs would have to be identical, and even then it would be desireable to seek the permission of the court and the IRS.

An alternative that is easier to achieve is to have the two CRUTs form an investment partnership so that their respective investments are merged and placed under the management of a single manager.

Does underperforming CRUT document allow a change of investment managers? If it does, the manager can be changed, giving the professional investment manager 2 accounts, without changing the trust. If it cannot, one may be required to ammend the document, which could have other consequences.

No.

Okay, I mean "yes, he can do that, assuming the legal paperwork is in order," but the IRS will not recognize the renunciation. Remember that "fruit and tree" concept: the taxation of the fruit cannot be separated from the ownership of the tree. If our term interest holder retains the right to future income, he still owns the tree.

If the CRUT is a NIMCRUT, it can be managed to minimize income distributions during the time that he doesn't need the income. Or, he can donate the income received to the charity, or even back to the CRUT which is paying him (not possible with a CRAT because no further contributions can be made).

Or, he can just start out with a deferred gift annuity instead of a CRT, which might meet his need for future income and a current tax deduction.

Depending on the specific needs of the donor and the ability of the charity, perhaps he can exchange his CRT interest for a deferred gift annuity?

Anyway, there are a lot of potential "right" answers here, which must be customized for the donor and donee's legal and tax situation.

The drafting attorney should be asked to look into this dilemma. Both the CRT document and state law will be involved in providing a solution if it is possible. CRTs generally are not written with an expectation to terminate, so a reformation proceeding to the local court may be required. There is the possibility of a partial assignment or partial termination of the client's income interest to the charity. This assignment or acceleration of a partial interest would give the grantor an income tax deduction for the partial gift that the charity will receive now. Addressing the issue of the spendthrift clause in the CRT and how it interplays with this possible solution is necessary. I think the questioner here needs to calculate the optimum level of income the donor can give up now with the amount of income the grantor needs years from now. The percentage partial termination/assignment does not achieve exactly what the grantor wanted but the CRT was an irrevocable transfer that generated a nice charitable deduction. Perhaps the grantor didn't fully explore his situation, taking into account the possibility of unknown needs when the CRT was created. Now the state, thw courts, and the charities will al see what the grantor will do with that CRT to accomplish another purpose. Grantor needs to forget about renouncement as it is not a viable alternative in these facts.