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How to Plan for a Financially Secure Future

It may reassure you to know that many retirees live comfortably on a lower income than people who work full time. When you retire, you tend to spend less on clothing, transportation, food and other daily expenses. You also generally pay less in taxes because of your lower income and the special tax breaks available to people aged 65 and older. Plus, if you are like many people, you can count on income from pensions, Social Security, investments and perhaps even earnings from a part-time job.

You may still wonder if your retirement income will be adequate. Will you have enough income during retirement, without spending too much of your principal?

A Plan to Make Your Assets More Productive With Minimal Risk
One attractive charitable plan that can ensure your personal financial future and help us achieve our important goals is a unitrust. Under this plan, you 1) make a gift to The Foundation, which we will receive in the future, 2) receive an uninterrupted stream of income for life, and 3) benefit from an immediate and valuable tax deduction.

For example, suppose you would like an income for your lifetime based on a specific percentage of the fair market value of the assets you select. (You also have the right to name another person to enjoy an income for life if that person survives you.) To accomplish this, you create a charitable remainder unitrust, funding it with those assets. Cash and marketable securities are the most common types of assets used, but real estate and other types of nonliquid assets may also be included. You choose the percentage of income at the outset, and your income for each year is calculated by multiplying this rate by the latest annual valuation of the trust's assets. Thus, your income will vary each year with the value of the underlying assets.

You will enjoy a partial charitable deduction in the year you fund the trust. If you cannot use your full deduction in the year you fund the trust, you will have five additional years to use the balance. At the termination of the trust, the assets are distributed to us to support our mission.

Example: Alice, aged 60, contributes $100,000 in cash to a unitrust, arranging to receive 6 percent of the fair market value of the unitrust assets each year. The first year she is entitled to $6,000 (6 percent of $100,000). At the time of the second valuation, the unitrust portfolio is worth $110,000. For that year, Alice is paid $6,600 (6 percent of $110,000). If the trust value had decreased to $90,000 at the time of the second valuation, Alice would have received $5,400 (6 percent of $90,000). In each subsequent year, the same process is followed. In the year she creates the unitrust, Alice is entitled to an income tax charitable deduction of $32,831* (deductible up to 50 percent of her adjusted gross income). If necessary, she has an additional five years to use up the deduction.

An Open Invitation
You are invited to create your own distinctive plan for a more financially secure future. You can increase your cash flow and decrease your current income tax bill with the satisfying assurance that your benevolence will perpetuate our good work.

Ask our representative to help you choose a plan.

Another Option to Consider: Wealth Accumulation Trust
If you are a high-income earner, you may be concerned about the limits on your qualified retirement plans and how you can protect yourself.

A wealth accumulation trust is a special kind of charitable remainder unitrust you can add to every year or whenever you wish. In effect, this becomes your supplemental retirement income plan. Unlike company pensions, it is a plan designed just for you that generally pays you income during your retirement years. If you are married, your spouse can benefit, too.

Every time you transfer funds to the trust, you are entitled to an immediate partial income tax charitable deduction. If you add long-term appreciated securities, you enjoy an income tax deduction based on a portion of the fair market value of the securities, and you avoid the up-front capital gains tax you would have paid if you had sold the securities.

After your lifetimes, the trust remainder is paid toward our organization's vital purposes.

*Based on a 3.4 percent charitable midterm federal rate

Please call Julie Snyder at 716-862-1992, or e-mail us at jsnyder@chsbuffalo.org, for more information.

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.