|
Charitable Remainder Unitrust
Support for charity - tax savings, a charitable deduction, and income for you
A charitable remainder unitrust through Anabaptist Foundation is an ideal way to turn your assets like real estate and securities into a cash gift without losing much of your gain to taxes - and support your favorite charities at the same time. It is a particularly good gift plan option for making a donation of an asset that may take some time to sell.
How it works
Before you arrange a sale of your property, make a gift of the actual asset to Anabaptist Foundation. You may give the entire asset or any percentage. The foundation finds a buyer for your gift asset and converts it to cash. We then provide you or your beneficiaries with income from the gift for the rest of your life, as long as the trust generates income. The minimum payout rate is 5 percent and can be higher. In most cases, payments are made only when the trust earns income. As a general rule of thumb, we recommend the payout rate be no more than the decade of your age. For example, you might choose to be paid 6 percent if you are between the ages of 60 and 69 or 7 percent if you are between the ages of 70 and 79.
You benefit substantially with an immediate tax deduction, plus you avoid income tax on the amount your asset has increased in value since you purchased it, unless the Alternative Minimum Tax is involved.
And you get the satisfaction of knowing that charities you recommend will benefit from your generosity.
Anabaptist Foundation charitable remainder unitrusts are offered in conjunction with our partners at Mennonite Foundation and MMA Trust Co.
Advantages for donors
Flexibility - You can give a wide variety of assets: cash, real estate, securities, commodities, or anything on which a fair market value can be placed. The trust can accommodate either a one-time gift or multiple gifts over time.
Freedom - The foundation takes responsibility to liquidate non-cash assets and to manage gift proceeds.
Avoid capital gains tax - When appreciated securities held long term are donated, the donor does not have to pay tax on capital gains. This leaves ore money to go to charity.
Immediate tax deduction - In the year the gift is made, you get a federal income tax deduction for the present value of the charitable remainder interest in the property held long term - up to 30 percent of your adjusted gross income. Any deduction you qualify for above these limits may be carried forward for up to five successive years.
Tax contribution receipt . Anabaptist Foundation will issue contribution receipts to donors for tax purposes.
Privacy - If the donor wishes to give anonymously, the foundation can act as a screen between the donor and recipient charities.
Minimize estate taxes - Assets placed in a charitable trust are no longer part of your estate, which reduces the size of the estate and may reduce estate taxes.
Accounting information - You receive an annual statement of your trust activity that includes a balance sheet and an income and expense statement. Additional statements can be requested at any time.
A Case Study
Greg Sample, age 69, and Rachel Sample, age 71, donate an asset to Anabaptist Foundation, which is converted to cash and results in an investment of $100,000. They agreed to a 5.25 percent payout rate. Assuming the trust earns 6.5 percent after service fee assessments, here is what they can expect to happen over their lifetimes.
Initial gift amount $100,000
Charitable tax deduction $40,394
Payout rate 5.25%
Earnings rate 6.5%
Joint life expectancy 21.8 years
Tax bracket 15%
Total income and tax benefits $134,913
Ending estimated gift amount $127,538
What this means, is that Mr. and Mrs. Sample would realize nearly $135,000 in income and tax benefits during their calculated expected joint lifetime of 21.8 years, plus donating more than $127,000 to their favorite charities. That is over $260,000 in benefits from an initial donation of just $100,000.
Note: This information should be used only for preliminary guidance. Donors should consult their attorneys and accountants.
<< Back to Services for Donors
|
