Providing a lifetime income through a Charitable Remainder Trust

What if you could give a gift that offers an immediate tax deduction, provides an annual income to you for the rest of your life, and with the final remaining funds becomes a legacy that supports your favorite charity? A Charitable Remainder Trust, Or Unitrust, may be your answer.

Sometimes in life, you actually can have it both ways: providing future funding for your favorite cause or causes, while receiving a steady income for yourself and/or your spouse for the rest of your lives. This can be done by setting up a Unitrust, also known as a Charitable Remainder Trust, or CRUT. This can be funded directly with cash, but further tax savings can result if you use appreciated assets.

Upon establishing and funding the CRUT, you enjoy an immediate tax deduction, with the amount determined by a formula based on your age and other factors. By law, a fixed percentage (minimum 5%) of the annual value of trust assets is paid to the income beneficiary, usually the donor. For example, a CRUT with a value of $200,000 and a 5% payout would pay $10,000 to the income beneficiary in that year. If the investment performance for that year was 10% and the value of the trust on the valuation date was $220,000 the income beneficiary would receive $11,000 in that year. Upon the death of the donor or donors, the balance in the CRUT goes to the charity or charities that you designated.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisor(s) before engaging in any transaction.
For over 30 years, A Stepping Stone Foundation has been offering preschool, adult literacy, and parenting programs in Maricopa County at no charge to our clients. We have served thousands of individuals since 1989, and many of our former preschoolers have gone on to college and successful careers, all made possible by your generous tax-deductible donations. Your contribution today helps fund education for children and parents in need, greatly increasing their chances for full, successful lives.

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