Charitable Remainder Trusts
Gifts Options to Fit Your Lifestyle
A charitable remainder trust may be either a charitable remainder unitrust or a charitable remainder annuity trust. Since these gifts are separately invested, the minimum gift is $100,000 and must have a minimum payout of 5%. In most cases, donors are at least age 50. There is a partial, charitable tax deduction based on the payout rate and ages of the beneficiaries.
The unitrust and annuity trust vary from each other in three distinct ways:
The payout is fixed at the time of the gift for the annuity trust, but is a percentage of the annual fair market value of the trust for the unitrust. (Consequently, the unitrust is a better hedge against inflation.)
You may only make future additions to a unitrust.
The unitrust is much more flexible than an annuity trust. For example, you may elect to receive the lesser of the stated percentage payout or the net income earned in order to preserve and grow your original gift value. Also, a unitrust is the best vehicle for gifts of marketable real estate when a donor desires an income stream once the property is sold.
Term Charitable Remainder Trusts
Please note: Unlike a life income trust, a charitable remainder trust may be established for a term of years (not to exceed 20 years). The charitable tax deduction will then be based on the payout rate and the term of years, rather than a beneficiary's life expectancy.
Please contact Christine Tebes to learn more about charitable remainder trusts.