Charitable Remainder Trusts offer three distinct advantages:
 

1. They bypass capital gains (when funded with appreciated assets)
2. They create a life income stream that may be higher than what you currently receive, and
3. They allow you a substantial charitable deduction for your gift to ministry.

The costs of administering a trust are higher than a charitable gift annuity, and so we recommend that a minimum funding amount of $100,000 or more be used to establish your trust.

Two types of charitable trusts offer unique planning features:

Charitable Remainder Unitrusts

A Unitrust offers:
 

• Income payments for lifetime, or for a fixed term of up to 20 years.
• A choice of payouts based on trust net income, or a fixed percentage payout based on the trust revaluation each January 1.
• Potential for long-term growth of trust assets, free of capital gains tax.
• The capability to fund the trust with assets that are temporarily illiquid (real estate, family business, etc.)
• Portfolio diversification
• The opportunity to add to the trust during your lifetime

The individually managed Unitrust also provides the flexibility to invest solely for growth for a term of years, and then to convert its appreciated portfolio to higher yielding income instruments with no capital gains tax. This ability to build-up the trust value permits planning for future retirement and tuition needs while also making a substantial gift for ministry.

Charitable Remainder Annuity Trusts

An Annuity Trust’s primary benefit to the benefactor is its stable, predictable income, but in addition, the amount that may be claimed as a charitable deduction value is often higher. And, similar to the Unitrust, it offers professional portfolio diversification and management.

In order to help you compare the benefits of a Charitable Remainder Unitrust with a Charitable Remainder Annuity Trust, please see the following benefits comparison. Let us assume that the beneficiaries are aged 72 and 70, that their joint life expectancy is 19.8 years and that they contribute $100,000 in stock that cost them $50,000 to buy. In this example, you can see how the plans compare.

For further information and assistance, please contact Diane Arndt or Steve Hoffman of our Gift and Estate Design services team.

Phone: 1-317-881-6755 ext. 334 (Diane Arndt)

E-mail: shoffman@omsinternational.org, or darndt@omsinternational.org

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