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Charitable Remainder Unitrust (CRUT)
The charitable remainder unitrust is a trust designed to receive your assets and make variable annual payments (not to exceed 20 years) equal to a percentage of the fair market value of the trust assets as recalculated yearly.
There are several versions of the charitable remainder unitrust:
- Regular Charitable Remainder Unitrust (CRUT): This trust pays trust beneficiaries at least 5 percent of the fair market value of the trust’s assets as recalculated annually. The annual income varies based on the value of the assets.
- Net Income Charitable Remainder Unitrust (NICRUT): This version pays the donor the lesser of the stated percentage payout or the net income earned by the trust.
- Net Income Charitable Remainder Unitrust with Makeup Provision (NIMCRUT): This trust is similar to the NICRUT above with one major exception. If, in any year the trust income exceeds the fixed percentage payout, the excess must be used to make up any prior deficiencies. It offers great flexibility in retirement planning because income can effectively be deferred until later years.
- Charitable Remainder Flip Unitrust: The flip unitrust is a blend of a net income unitrust (NICRUT) and a regular unitrust (CRUT). It operates as a NICRUT in the beginning, then converts to a CRUT on a triggering event such as the sale of an assets, death, birth, etc.
How It Works
- You transfer cash, securities, or other appreciated property into a trust.
- The trust pays a percentage of the market value of the assets revalued annually to you or to beneficiaries you name.
- When the trust ends, the principal passes to Tabernacle Baptist Church.
Benefits
- You receive an immediate income tax deduction for a portion of your contribution to the trust.
- You pay no capital gains tax on appreciated assets you donate.
- You or your designated beneficiaries receive income for life or a term of years.
- You can make addition gifts to the trust as your circumstances allow.
- You qualify for additional tax deductions.
- You have the satisfaction of making a significant gift that benefits you now and Tabernacle later.
Consult Your Financial Advisor
When considering a Charitable Remainder Unitrust, consult your financial and estate planning advisors. They will help you determine if a CRUT is right for you.
Click the button below to calculate how
a Charitable Remainder Unitrust can benefit you.
A Case Study
Dennis, age 70, is retired and owns as part of his assets $100,000 worth of stock, which he purchased many years ago for $20,000. The stock yields a modest annual dividend of 1.5%. Dennis would like to increase retirement income for himself and his wife Jane (also age 70) by reinvesting in higher yielding securities, but if he sells the stock, he will be forced to pay a federal capital gains tax of $12,000. Instead, he establishes a charitable remainder unitrust, naming himself and Jane as the income beneficiaries.
The charitable remainder unitrust will pay Dennis and Jane 8% of the trust assets each year for the remainder of their lives. Their distributions increase immediately from $1,500 to $8,000 per year and will grow over time if the trust assets appreciate in value, but will always represent 8% of the trust value. Following the deaths of both Dennis and Jane, the remaining principal will be given to Tabernacle Baptist Church.
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If you would like more information about planned giving at Tabernacle, contact Dr. Bruce Minett - Executive Associate Pastor. He will be happy to speak with you.
Disclosure:
The information in the planned giving section of Tabernacle's web site is not designed to act as legal or financial advice. While Tabernacle Baptist Church is glad to provide general information, this information should be reviewed by professional, financial advisors prior to any action.
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