Charitable remainder annuity trusts and charitable remainder unitrusts can help you meet your financial goals, including planning for retirement, providing for relatives, and funding educational expenses.
These gifts, which feature periodic payments to you or your loved ones, may be funded with cash or appreciated property. A charitable remainder trust can do the following:
- Provide payments annually for life or a term you choose for you and/or another beneficiary
- Reduce your tax bill through a charitable deduction
- Enable you to “unlock” income from highly-appreciated but low-yielding property while saving, delaying, or altogether avoiding capital gains tax
- Dversify investments without incurring capital gains tax
- Offer professional investment management
- Save estate and gift taxes
When you establish either a charitable remainder annuity trust or a charitable remainder unitrust, you may elect to have payments made to you or to another beneficiary for a period of time up to 20 years, rather than for the lifetime of one or more beneficiaries. Some givers elect to provide payments only for the period of time required to meet a fixed need, such as educational expenses. The tax benefits of such trusts can be especially attractive.
Members of the Museum’s Professional Advisory Committee will be pleased to discuss with you the terms and provisions of charitable remainder trusts.
Annuity Trust: A Gift With Payments that Never Change
A charitable remainder annuity trust is a gift that allows you, or the person(s) designated by you (or you, followed by another person(s) designated by you), to receive fixed annual payments for life or for a stated period of time. Such payments can be a welcome supplement to a retirement plan. At the same time, an annuity trust can provide asset management for you and your surviving loved ones. At your death (or the death of your surviving spouse, partner, or other loved one you designate), whatever remains in the trust will be distributed to the Museum.
Annuity trusts are typically feasible in amounts of $100,000 or more; annual payments will be at least 5% of the amount initially placed in the trust (the exact amount is determined when the plan is created). A charitable income tax deduction is allowed at the time you create your trust. Its size depends on a number of factors, including the age of the person(s) receiving payments, the payment rate, and other factors.
Unitrust: A Gift with Payments that Fluctuate
Like the annuity trust, a unitrust is a gift that provides annual payments, but unlike the annuity trust the payments from a unitrust fluctuate with the value of the assets in the trust. In a unitrust, each year, a percentage of the value of the trust’s assets is paid to you or to the person(s) designated by you. As with the annuity trust, what remains in the trust at your death (or the death of your designated beneficiary) will be distributed to the Museum.
Like annuity trusts, unitrusts are typically feasible in amounts of $100,000 or more. Additions may be made to a unitrust; a tax deduction is allowed for a portion of each amount contributed.