A charitable remainder unitrust is like a combination of a gift and an investment plan. You place assets in trust and you (and/or another beneficiary) receive lifetime income from them, then we receive the remainder.
With a unitrust, the amount you receive, as income is a set percentage of the value of the trust assets, predetermined annually.
You also have the option of choosing a unitrust with a net income plus make-up provision. That way, in years when the actual yield is below the stated percentage, you receive only that amount. Then later, when performance is better, those deficiencies are made up.
This option is excellent for devising a supplemental retirement plan. We can provide you with more details.
Jane, age 60, has stocks currently valued at $100,000 and yielding a 4% dividend. She transfers them to a unitrust, incurring no capital gain. She arranges to receive 7% of the fair market value of the unitrust assets each year, payable quarterly. She receives an income tax deduction based on U.S. Treasury tables. The first year, she’s entitled to $7,000 (7% of $100,000). The next year, if the value of her trust has increased, so will her income payments, so Jane has a built-in hedge against inflation.
Lifetime income (often greater than your previous yield)
A sizable income tax charitable deduction
Avoidance of capital gains tax if you donate appreciated securities
Professional management of the assets frees you from investment worries