Charitable Remainder Unitrusts: Giving & Receiving

Some estate planning instruments provide the ability to satisfy multiple objectives, and one of these is the charitable remainder unitrust. With this trust, you provide something for charity but at the same time set up an annuity that provides you with ongoing income. And, there can be some tax advantages as well.

After you fund the trust, you name a beneficiary who will receive annual annuity payments; and if you want to receive payments yourself, you will act as this non-charitable beneficiary. The annual payments that the beneficiary receives must be at least 5% of the overall value of the trust, but they cannot exceed 50% of its value.

In addition to naming a non-charitable beneficiary, you also name a charitable beneficiary. This charitable organization will receive the remainder that is left in the trust after the term expires. This remainder must equal at least 10% of the original value of the trust.

Tax advantages include reducing the taxable value of your estate by the amount of the contribution into the trust. The IRS also allows an income tax charitable deduction based on specific rules that they have regarding charitable remainder unitrusts. There may also be capital gains tax advantages if you place appreciated securities into the trust.

These trusts can be a useful addition to many estate plans. If you are interested in the possibility of creating a charitable remainder unitrust, don’t hesitate to pick up the phone to arrange for a consultation with a Northern Kentucky estate planning lawyer.