A Charitable Remainder Unitrust (CRUT) makes regular payments based on a percent of the trust’s assets. These payments, which can be made to the donor or other named income recipient, can be for life, a term of up to 20 years or both. The amount of the annual payments will go up and down based on the trust balance, subject to market performance. The amount remaining in the trust at the termination of the trust will go to the donor's choice of funds at InFaith Community Foundation, benefiting charities or areas of charitable work recommended by the donor.
The gift minimum is $100,000 for cash and/or publicly-traded securities/mutual funds, and $200,000 for real estate or closely-held stock (please ask about other gift types). The donor can make multiple gifts into the trust. (If a gift of real estate is being considered, contact InFaith for additional information regarding FLIP unitrusts.)
How to Establish a Charitable Remainder Unitrust at the Foundation
- Request a personalized illustration for your client using our online request form or call 800-365-4172 and speak to an InFaith Gift Planner. To create a customized illustration for your client, InFaith requires the following information:
- Client's name, birthdate and tax bracket; and
- Proposed gift amount, including cost basis.
- Review the illustration and disclosure materials packet to review with your client.
- If your client wishes to proceed and establish a unitrust, complete and return the Charitable Remainder Trust Application, IRS Form W-9 and Fund Workbook.
- If the client is giving cash, please do not send any money at this time, the gift will be made once the trust is established.
- If the client wishes to give stock, include copies of either the stock certificates or the most recent brokerage statement. InFaith will contact you with specific instructions on how to transfer the stock, once the trust is established.
- Clients 50 or older (but may be younger for a term of years trust);
- Clients interested in additional income;
- Younger clients (50+) who can withstand market fluctuations;
- Clients with significant assets;
- Clients interested in converting an existing asset into a gift that provides a stream of ongoing income;
- Clients who wish to give appreciated stock and/or real estate, and bypass associated gains;
- Clients who may wish to make additional gifts to their trust at a later date;
- Clients who have maxed out qualified retirement plan contributions but still need additional retirement income; and
- Clients with appreciated securities who are seeking ongoing income for long-term care or wealth replacement insurance premiums.
Tax and Financial Benefits of Creating a Charitable Remainder Unitrust
- The trust beneficiaries receive variable income payments for life, a term-of-years, or both;
- The donor receives a charitable income tax deduction in the year of the gift;
- For gifts of cash, the annual deduction limit is 60% (for gifts January 1, 2018 and thereafter) of the donor’s AGI;
- For gifts of long-term appreciated securities, the annual deduction limit is 30% of the donor’s AGI;
- Unused charitable deductions may be carried over an additional five years; and
- The unitrust sells appreciated assets tax-free; 100% of the gift is reinvested to produce income.
Payments can be paid to the donor, a relative or friend, and are taxable as income. There may be estate/gift tax consequences if someone other than the donor or the donor’s spouse is named as income recipient.
Unitrust Payout Rate
In determining a payout rate, InFaith looks to various factors, including the current economy, the prevailing IRS discount rate and the age of the trust income beneficiaries. Once the percentage has been set in the signed trust document, it cannot be changed. The variable annual payment is calculated annually, based on the percentage in the trust agreement.
Resources to Support Your Work
- Customized illustrations (use the request form or call InFaith)
- Charitable Remainder Trust Information Sheet
- Give Now, Give Later, Give & Receive brochure
- Tools & Resources for Advisors