Charitable Remainder Unitrust:
Making Your Property Work for You
© Connie Gelb
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One of the best ways to create a charitable remainder unitrust is through a gift of real estate. By donating your property to us you can:
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Avoid capital gains tax when gift is made
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Receive an income tax charitable deduction
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Save possible estate taxes
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Remove the burden of managing, marketing and selling your property
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Receive a lifetime stream of income
To qualify, your property must be worth at least $100,000 and marketable. (see retained life estate).
Funding a Unitrust with Real Estate
You establish a trust and donate your property to it. At that time you decide who will receive lifetime income or income for a term of years from the trust. You can designate yourself and/or others as the beneficiaries. You also choose a percent payout for the trust (the minimum is 5%). Then the trustee sells the property and reinvests the net proceeds. (You are responsible for any costs associated with the property until it sells.)
Until the property is sold, you will not receive income payments unless there are other liquid assets in the trust or the property produces income. Starting the year after the sale, you will receive payments based on your selected percentage of the trust’s fair market value (revalued each year).
How It Works (example)
Edith, a 68 year-old widow, would like to simplify her finances and begin supporting her favorite charities. So she decides to donate a vacation home worth $200,000 she no longer uses to a charitable remainder unitrust and names
the Organization as trustee. Edith chooses to receive an annual income payment of 6% of the value of the trust. She begins to receive her payments after the property sells and the proceeds are reinvested. The trust assets are revalued each year, and Edith’s payments change and may grow over time. She also avoids capital gain tax on the transfer and immediately qualifies for an income tax deduction of approximately $90,000. After her lifetime, the Conservancy will use the trust assets to save priority landscapes.
Charitable Remainder Unitrust
Information provided on our Internet site is not intended to be tax or legal advice.
Rates used in the examples are for illustrative purposes only. Please consult a qualified legal or financial advisor before making a gift.
| The Retirement Resource Organization, Inc. is a tax-exempt charitable organization under Section 501(c)(3) of the Internal Revenue Code.
Donations are tax-deductible. | |
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