Charitable Remainder Unitrust

What Is a Charitable Remainder Unitrust?

A Charitable Remainder Unitrust is a separately invested and managed charitable trust that pays a percentage of the principal, re-valued annually, to you or your 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 Columbia. Recommended minimum gifts for a unitrust range from $200,000 to $250,000, if Columbia is to serve as the trustee. For those who can make a gift of this size, the advantages can be considerable.

Example

A 55 year-old donor in the 35 percent tax bracket establishes a unitrust with $100,000 of appreciated stock, originally purchased for $10,000. Unitrust pays donor 5.0 percent of the trust assets re-valued annually for life. Trust earns a 8.0 percent average total return. Assume IRS discount rate of 6.0 percent.

N.B.: Consult legal and tax advisors before making any decisions based on this information.

The Unitrust Advantage: Flexibility

The most flexible life-income plan, unitrusts benefit you, your heirs, and Columbia. 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"). The Office of Gift Planning can help you fashion the right unitrust to achieve your goals.

Other Advantages

• You receive a charitable income tax deduction for a portion of your gift.
• You avoid ALL capital gains tax on any appreciated assets you donate at the time of funding.
• Depending on how the trust is invested, much of your income can be treated as capital gains income taxable at 15 percent.
• Unitrusts generally allow you to make additional gifts at any time.
• A Unitrust may reduce your estate tax liability.
• Your income can increase over time.
• You make a substantial gift to Columbia during your lifetime.

For More Information

E-mail us, complete the Personal Illustration form, or call us at 800-338-3294.