The Charitable Remainder Unitrust is very much like the Charitable Remainder Annuity Trust. However, there is a very significant difference in the determination of the periodic payment amount. Like the annuity trust, the unitrust payout cannot be less than 5%. However, the payout rate is applied to the fair market value of the trust assets, determined annually, to establish the periodic payment amount each year. This means that the payment changes as the value of the trust fluctuates from year to year. You may impose a ceiling on annual distributions to ensure that they do not exceed trust income in any year. Any shortfalls can be recouped in a later year, should trust income then exceed the current distribution requirement. Because of its flexibility, the unitrust is often funded by appreciated real estate in addition to cash and securities. One can also add assets to a unitrust at a later date.

Both the annuity trust and the unitrust have some very favorable benefits. With both, you receive an income tax and estate tax deduction. Both enable you to avoid tax on appreciated assets used to fund the trust. Both allow you to increase income from a low-yield holding. With the income and estate tax savings, gifts can be made at a lower cost. You will also have freedom from investment responsibilities. The annuity trust provides a fixed and certain dollar income for life and the unitrust is a hedge against inflation.

• read the Gift Annuities Brochure
• email umf@umf-tac.org or
• call our office to speak with someone personally