Charitable Remainder Unitrusts

A charitable remainder unitrust is a separately invested and managed charitable trust that pays a percentage of the principal, re-valued annually, to you, your spouse or other income beneficiaries for life or a maximum term of 20 years. You receive a charitable income tax deduction for a portion of any gift you make to the trust. After the unitrust terminates, the accumulated principal or "remainder interest" goes to The Hotchkiss School.

The unitrust advantage: flexibility

The most flexible life-income plan, a unitrust is a powerful vehicle for benefiting yourself, your heirs and The Hotchkiss School. You can use almost any asset to fund a unitrust, including cash, publicly traded stocks and bonds, closely held stock, partnership interests and real estate. You can tailor your unitrust to meet many financial or estate planning goals. You can choose to receive income beginning immediately or you can defer most of your income to a future time. If you are relatively young and insurable, you can even use some of the income or tax savings produced by your plan to purchase a life insurance policy that replaces your gift and flows to your heirs outside of your estate (this is called "wealth replacement"). We can help you fashion the right unitrust to achieve your goals.

Additional advantages:

  • Receive a charitable income tax deduction for a portion of your gift.
  • Avoid all upfront capital gains tax on any appreciated assets you transfer to the unitrust.
  • Reduce your estate tax liability by removing a large taxable asset.
  • Increase your income over time if the value of the unitrust grows (particularly appealing to younger donors and income beneficiaries).
  • You have the satisfaction of making a substantial gift to The Hotchkiss School during your lifetime.

Example

Comparison of Benefits: Unitrust and Annuity Trust

This example is based on a factor that changes monthly. Contact our office for a personal illustration based on the latest rates.

Assumptions:

> Beneficiaries aged 72 and 70
> 28% income tax bracket
> Holding $100,000 in stock with $50,000 cost basis

.

Unitrust

Annuity Trust

Contribution

$100,000

$100,000

Income Rate

5%

5%

First Year's Income

$5,000

$5,000

Future Income

Variable

$5,000/year

Charitable Deduction*

$43,433

$35,517

*Based on a Federal Discount Rate of 3.4%.

More

To learn more about charitable remainder unitrusts, Email us, complete the Information Request Form, or call us at (860) 435-3263 so that we can assist you.