Trusts

Charitable Remainder Annuity Trust

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How It Works

You transfer cash, securities, or other appreciated property into a trust. Our suggested minimum gift requirement is $100,000.  The trust then makes fixed annual payments to you or to beneficiaries you name.  When the trust terminates, the remainder passes to witf to be used in a manner you have directed.

Benefits

  • You receive income for life or a set term of years in return for your gift of cash, securities, or other appreciated property into a trust.
  • You receive an income tax deduction for a portion of your contribution.
  • You do not pay up front capital gains tax on the appreciated assets you donate.
  • Your trust can be made to meet personal or family needs that are tied to a specific time frame, like tuition payments.

Charitable Remainder Annuity Trust: FAQs

Who can serve as the trustee of my annuity trust?
In working with your team of professional advisors, a number of choices are available as to who would be the best trustee for you. Please contact witf to discuss this further.

How would the assets in my annuity trust be invested?
A Charitable Remainder Annuity Trust typically invested in a balanced portfolio that is designed to produce both income and growth over the term of the trust. An annuity trust may also hold tax-free bonds.

Is it better to give cash or appreciated securities?
Gifts of cash or appreciated property yield the same result for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.

How will the income from my annuity trust be taxed?
The income will be taxed according to the type of investments and payout rate of the trust. You will usually pay tax at the ordinary income level on any ordinary income that is distributed, up to your full payment. The rest of your income will be taxed at the next lowest rate, usually as capital gains, then as tax-free return of principal. If you desire to know your taxation rates when you fund your life income gift, you might want to consider a charitable gift annuity or deferred gift annuity.

Can I name my children as income beneficiaries?
Yes, subject to certain limitations.

What are the tax deduction implications of my charitable remainder trust?
A Charitable Remainder Annuity Trust is a powerful tool that can save you income, capital gain, estate, and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.

Charitable Remainder Unitrust

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How It Works

You transfer cash, securities, or other appreciated property into a trust. Our suggested minimum gift requirement is $100,000.  The trust then pays a percentage of the value of its principal, which is valued annually, to you or to beneficiaries that you name.  When the trust terminates, the remainder passes to witf to be used as you have directed.

Benefits

  • You receive income for life or a set term of years in return for your gift of cash, securities, or other appreciated property into a trust.
  • You receive an income tax deduction for a portion of your contribution.
  • You do not pay up front capital gains tax on the appreciated assets you donate.
  • You can make additional gifts to the trust as your circumstances allow which means additional income and tax benefits.

Charitable Remainder Unitrusts: FAQs

Who can serve as trustee of my unitrust?
A number of choices are available as to who would be the best trustee for you. Please contact witf to discuss this further.

How would the assets in my unitrust be invested? 
If the assets in the trust are liquid such as cash or securities, typically a unitrust is invested in a balanced portfolio that is designed to produce both income and growth over the term of the trust. If the trust assets are primarily nonliquid assets such as real estate or personal property, the trust may be held for growth in capital appreciation rather than current income. At some later date, the nonliquid assets could be sold (avoiding capital gains taxes) in order to be reinvested to produce income for the income beneficiaries.

Is it better to give cash or appreciated securities? 
Gifts of cash or appreciated property yield almost the same results for tax deduction purposes. However, gifts of appreciated property have the added value of avoiding capital gains taxes.

How will income from my unitrust be taxed? 
Your income will be taxed according to the type of investments and payout rate of the trust. You will usually pay tax at the ordinary income level on any ordinary income that is distributed, up to your full payment. The rest of your income will be taxed at the next lowest rate, usually as capital gains, then as tax-free return of principal. If you desire to know your taxation rates when you fund your life income gift, you might want to consider a charitable gift annuity or deferred gift annuity.

Can I give real estate or other property to a unitrust? 
In most cases, yes. The value of the trust principal will be determined by a qualified appraisal of the property. However, real estate or other property may not be producing income and thus the income beneficiaries may receive no or very little income until these assets are sold and reinvested to produce income.

Can I include my children as income beneficiaries? 
Yes, subject to certain limitations. Please contact witf to discuss this further.

What are the tax deduction implications of my Charitable Remainder Unitrust?
A Charitable Remainder Unitrust is a powerful tool that can save you income, capital gain, estate, and inheritance taxes depending on your circumstances and state of domicile. A qualified advisor is crucial to assist you in maximizing these benefits.

Contact witf about Planned Giving

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