Charitable Remainder Unitrusts
What is a Charitable Remainder Unitrust?
A charitable remainder unitrust is a separately invested and managed charitable trust that pays a percentage of the principal, re-valued annually, to you, your spouse or other income beneficiaries for life or a maximum term of 20 years. You receive a charitable income tax deduction for a portion of any gift you make to the trust. After the unitrust terminates, the accumulated principal or "remainder interest" goes to Sanford School. The minimum gift is $100,000 and the advantages can be considerable.
The Unitrust Advantage: Flexibility
The most flexible life-income plan, unitrusts are a powerful vehicle for benefiting yourself, your heirs and Sanford. You can use almost any asset to fund a unitrust, including cash, publicly traded stocks and bonds, closely held stock, partnership interests and real estate. You can tailor your unitrust to meet many financial or estate planning goals. You can choose to receive income beginning immediately or you can defer most of your income to a future time. If you are relatively young and insurable, you can even use some of the income or tax savings produced by your plan to purchase a life insurance policy that replaces your gift and flows to your heirs outside of your estate (this is called "wealth replacement"). We can help you fashion the right unitrust to achieve your goals.
What Are The Other Advantages?
- Receive a charitable income tax deduction for a portion of your gift.
- Avoid ALL capital gains tax on any appreciated assets you donate at the time of funding.
- Depending on how the trust is invested, much of your income can be treated as capital gains income taxable at the 15% rate.
- Unitrusts are usually written to allow you to make additional gifts at any time.
- May reduce your estate tax liability if you have a taxable estate.
- Your income can increase over time if the underlying investments perform well (particularly appealing to younger donors and income beneficiaries).
- The satisfaction of making a substantial gift to Sanford during your lifetime.
If you are interested in maximum flexibility and effectiveness from your gift, consider the charitable remainder trusts (CRT's) of Sanford School.
- Our unitrust pays you and/or other beneficiaries income as a fixed percentage of the principal. The unitrust is revalued annually, and income in excess of the percentage payout is reinvested.
- Our annuity trust pays you and your beneficiaries a fixed income.
CRT's may pay income to multiple beneficiaries, for life or a term or years. A unitrust may be structured to invest solely for growth for a term of years, an attractive way to help provide for future retirement or tuition needs while also making a substantial gift to Sanford. An annuity trust may hold tax-free securities and pass tax-free income through to the beneficiaries.
You, your financial institution, or Sanford School may serve as the trustee of a CRT. We presently ask for a minimum gift of $100,000 to establish a unitrust that we will trustee.
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Example
Comparison of Benefits: Unitrust and Annuity Trust
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This example is based on a factor that changes monthly. Contact our office for a personal illustration based on the latest rates.
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Assumptions:
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> Beneficiaries aged 72 and 70
> 28% income tax bracket
> Holding $100,000 in stock with $50,000 cost basis
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Unitrust
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Annuity Trust
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Contribution
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$100,000
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$100,000
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Income Rate
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5%
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5%
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First Year's Income
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$5,000
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$5,000
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Future Income
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Variable
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$5,000/year
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Charitable Deduction*
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$43,764
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$43,367
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*Based on a Federal Discount Rate of 5%.
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More
To learn more about charitable remainder unitrusts, Email us, complete the Information Request Form, or call us at 302-239-5263 ext. 279 so that we can assist you.
