Charitable Remainder Unitrust

What is a Charitable Remainder Unitrust?

A charitable remainder unitrust ("unitrust") is a gift plan defined by federal tax law that allows you to provide income to yourself or others for life or a term of years while making a generous gift to West Wisconsin Land Trust.

As a unitrust donor, you irrevocably transfer assets, usually cash, securities, or real estate, to a trustee of your choice (for example, West Wisconsin Land Trust or a bank trust department). During the unitrust's term, the trustee invests the unitrust's assets. Each year, the trustee pays a fixed percentage of the unitrust's value, as revalued annually, to one or more income beneficiaries named by you. Payments must be at least 5% of the trust's annual value and are made out of trust income, or trust principal if income is not adequate. Payments may be made annually, semiannually, or quarterly.

Example:

If you irrevocably transfer $1,000,000 in property, with a cost basis of $250,000 to a unitrust that pays 5% of its value each year for the lifetime benefit of individuals, age 81 and 77, benefits would include:

1. You will qualify for a federal income tax deduction of approximately $566,750. Your deduction may vary modestly depending on the timing of your gift. Note that deductions for this and other gifts of long-term appreciated property will be limited to 30% of your adjusted gross income. You may, if necessary, take unused deductions of this kind over the next five years, subject to the same 30% limitation.

2. Your designated income beneficiaries will receive payments in quarterly installments for life. In the first year, these payments will be approximately $50,000. Payments in future years will vary with the value of the unitrust.

3. Your entire gift property will be available for reinvestment, free of capital gains tax. If you were to sell and reinvest this property yourself, you would owe tax on $750,000 of the capital gain.

4. Your estate may enjoy reduced probate costs and estate taxes.

5. You will provide generous support of West Wisconsin Land Trust.

6. Your gift will benefit from expert asset management, provided by the same professionals who manage West Wisconsin Land Trust's endowment.

These calculations are estimates of gift benefits; your actual benefits may vary depending on the timing of your gift.

If you would like to produce your own charitable deduction calculations, visit PG Calc.

For more information on donations, please contact the West Wisconsin Land Trust.