Two Birds, One Stone – Estate Planning With A Charitable Remainder UniTrust
The beauty of estate planning is that each plan is custom designed and there are options for everyone depending on your assets and your goals. One of the most interesting options is the Charitable Remainder UniTrust (CRUT). If you have a charitable organization or your alma mater that you would like to donate money to upon your passing, this is one of the most effective vehicles. It allows you to donate money and get paid for the remainder of your life while reducing tax liability.
Typically the way a CRUT is set up is that you or members of your family are the initial beneficiaries. Once set up, the trust then provides variable income to the beneficiary. The variable income is based on a percentage of the fair market value of the assets in the trust. And the amount is revalued each year. The way CRUTs are usually funded is with assets such as artwork, real estate, stocks and bonds. You can add assets to the trust over time. Your designated charity must receive a minimum of 10% of the trust’s value.
This basic overview does not provide all of the many and various intricacies of CRUTs, however there are several different kinds. There’s the Standard Unitrust, Net Income Unitrust and a Flip Unitrust.
One of the main reasons for using a Charitable Remainder Unitrust is for the favorable tax treatment. The trust does not have to pay capital gains tax when it sells a trust asset making it attractive when selling highly appreciated assets. Grantors might transfer appreciated stock or other property into a trust for this reason alone.
I’ve included a link to a site that gives more detailed information about CRUTs. If you would like to review your current estate and strategize to see if a CRUT is a viable option, give our office a call.
For more information on Charitable Remainder Unitrusts: