guide
Charitable Remainder Trusts
A charitable remainder trust is an irrevocable trust created for your lifetime or the lifetime(s) of one or two other beneficiaries named by you, or for a fixed term of not more than 20 years. A charitable remainder trust may be established by transferring assets such as cash or securities to a trust for which UCS may serve as trustee. Other individuals or organizations may also serve as trustee.
During your lifetime, the lifetime of the beneficiaries, or the term of the trust, the trustee invests the trust assets and distributes payments to you or your named beneficiaries, usually on an annual or quarterly basis. The payout rate is set by you and your advisors and must be at least five percent. Upon the death of the income beneficiary(ies) or the termination of the trust's term, the remainder of the trust passes to UCS (and/or other designated charities).
Example: Jane would like to make a significant gift to UCS, but is also concerned about maintaining her financial stability. She would also like to have the ability to possibly increase her payments over time. Jane, who is 70, decides to set up a $250,000 charitable remainder unitrust with UCS in January 2003 after consulting with her tax advisor and UCS. She establishes UCS as the trustee, who will pay her five percent of the market value of the trust recalculated annually for her life. She learns that she is entitled to a charitable income tax deduction equal to 53.6 percent of the value of the property contributed to the trust. In addition, since she funded the trust with appreciated stock, she is able to avoid paying any capital gains on the asset. The remainder of the trust passes to UCS.
There are two popular options available for charitable remainder trusts:
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A Charitable Remainder Unitrust provides the potential for increased payments over time. As trustee, UCS distributes a fixed percentage of the unitrust's value—as valued annually—to you or your designated income beneficiaries. A charitable remainder unitrust may accept subsequent contributions.
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A Charitable Remainder Annuity Trust provides payments to you or your designated income beneficiaries equal to a fixed percentage of the initial fair market value of the trust assets.
If you wish UCS to serve as trustee of your charitable remainder trust, UCS requires a minimum contribution of $250,000 to fund the trust, and at least 50 percent of the trust remainder must pass to UCS. Income beneficiaries must be at least 50 years old.
For more information
For more information, please contact Adam Kessler by phone at 800-666-8276 or by email at akessler@ucsusa.org.
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