Charitable Remainder Unitrusts
How it Works
- You transfer cash, securities or other appreciated property into a trust.
- The trust pays a percentage of the value of its principal, which is valued annually, to you or beneficiary(ies) you name.
- When the trust terminates, the remainder passes to
Exeter to be used as you have directed.
Benefits
- Receive income for life or a term of years in return for your gift.
- Receive an immediate income tax deduction for a portion of your contribution.
- Pay no upfront capital gains tax on appreciated assets you donate.
- You can make additional gifts to the trust as your circumstances allow for additional income and tax benefits.
Please contact us so that we can assist you through every step of the process.
Questions and Answers
Who can serve as trustee of my unitrust?
In working with your team of professional advisors, a number of choices are available as to who would be the best trustee for you. Please contact us to discuss this further.
How would the assets in my unitrust be invested?
If the assets in the trust are liquid such as cash or securities, typically a unitrust is invested in a balance portfolio that is designed to produce both income and growth over the term of the trust. If the trust assets are primarily non-liquid assets such as real estate or personal property, the trust may be held for growth in capital appreciation rather than current income. At some later date, the non-liquid assets could be sold (avoiding capital gains taxes) to be re-invested to produce income for the income beneficiaries.
Is it better to give cash or appreciated securities?
Gifts of cash or appreciated property yield the same result for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.
Can I give real estate or other property to a unitrust?
In most cases, yes. The value of the trust principal will be determined by a qualified appraisal of the property. However, real estate or other property may not be producing income and thus the income beneficiaries may receive no or very little income until these assets are sold and re-invested to produce income.
Can I include my children as income beneficiaries?
It depends on the age(s) of any children you name as income beneficiaries. Our interest in the trust must be at least 10% of the value of the assets donated to the trust. This interest is calculated using the life expectancies of the income beneficiaries. Thus, the younger your children, the longer their life expectancy, and the smaller will be the charitable remainder value. Even younger adult children may disqualify the trust.
What are the tax deduction implications of my charitable remainder unitrust?
A charitable remainder unitrust is a powerful tool that can save you income, capital gain, estate and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.
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