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Home > Planned Giving > Estate Planning for Physicians > Charitable Unitrust: A Gift That Pays You Back

Charitable Unitrust: A Gift That Pays You Back

One of the best ways to receive the benefits of philanthropy is through a charitable remainder unitrust.

Getting Started
You create a unitrust by giving money, property or both to a trustee, who reinvests the assets to produce income for you and a beneficiary, if you choose. The income amount is determined by multiplying a fixed percentage by the fair market value of the trust assets as revalued annually. You receive an income tax charitable deduction for the amount of your gift for the present value of the remainder interest eventually passing to us. Funding the trust with appreciated assets, such as stock, eliminates any up-front capital gains you would normally incur on a sale.

How It Works

TRIPLE THE MONEY

Donor profile: Susan, aged 70, wants to make a gift to Sisters Hospital Foundation but is worried about having enough money to pay her bills and cover unexpected expenses.

Gift vehicle: Susan creates a charitable remainder unitrust with annual payouts equal to 6 percent of the fair market value of the trust assets. She funds the trust with $100,000 worth of stock, which she originally bought for $30,000. The stock paid her annual dividends of $2,000.

Benefits to donor: Susan receives $6,000 the first year from the trust, tripling her previous investment income. She is eligible for a federal income tax charitable deduction of $47,226. This deduction saves Susan $11,807 in her 25 percent tax bracket, effectively reducing the cost of her gift to $88,193.

Note: If Susan had sold the stock, she would not have received the charitable deduction, plus she would have paid an additional $10,500 in capital gains tax.

Benefits to The Foundation: At the end of the trust term, The Foundation will receive a projected $117,258 based on 7 percent growth and appreciation.
Gift Calculator Calculate how a charitable remainder unitrust can benefit you.

1. Based on a 3.4 percent charitable midterm federal rate.

Copyright © The Stelter Company, All rights reserved.

The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.