A charitable remainder unitrust pays you and/or other beneficiaries income for life or for a fixed number of years. You receive an immediate income tax deduction for a portion of your contribution and save on capital gains taxes.
How it works
- You transfer cash, securities or other appreciated property such as real estate into a trust.
- The trust pays a percentage of its value to its beneficiaries for their lifetimes, for a term of up to 20 years, or for a combination of both. Beneficiaries receive a fixed percentage of the value of the trust's principal, which is revalued annually.
- When the unitrust terminates – either at the death of the last beneficiary or at the end of the trust term – the remaining balance will transfer to The Nature Conservancy.
- Receive an immediate income tax deduction for a portion of your contribution, based on the full fair market value of the assets you contribute less the estimated payments that beneficiaries will receive from the trust.
- Save on capital gains tax: Pay no up-front capital gains taxes if you fund a unitrust with appreciated securities or real estate, pay no capital gains taxes when the assets you have contributed are sold, and pay no capital gains taxes on principal growth.
- Contribute appreciated but low–yielding assets and diversify tax-free, putting the full value of your gift to work generating higher trust payments.
- Generate income for life or a term of years for you and/or your beneficiaries.
- Make additional gifts to the trust and qualify for additional tax deductions and increased trust payments.
- Have the satisfaction of making a significant gift that benefits you now and The Nature Conservancy later.
A charitable remainder unitrust is for you if:
- You want to make a major gift to The Nature Conservancy while retaining or increasing your income from the assets you contribute. Unitrusts are generally funded with at least $50,000 in cash or stock or $100,000 in real estate.
- You hold appreciated assets — securities, real estate, or a business — and want to avoid the capital gains cost of a sale.
- You want the payments from your gift to be able to grow over time rather than be fixed to provide a hedge against inflation.
- You desire flexibility in the operation of your gift.
The standard unitrust is designed to pay you income as a fixed percentage of gradually increasing principal. Payments from a standard unitrust begin as soon as the trust is created and funded.
Alternatively, it is possible to establish a "FLIP" unitrust now and secure an immediate tax deduction, but receive most of the trust payments beginning at a future date. This allows you to build a supplementary retirement fund that will grow tax–free and distribute payments at a later date.
A unitrust is administered by a trustee the trustee can be The Nature Conservancy, yourself, or other trusted a financial advisor or institution. The Conservancy has extensive experience managing many hundreds of unitrusts in partnership with carefully chosen outside trust administrators. We are proud of the investment returns our trusts have earned, and of the low fees we have negotiated for our trusts.
Unitrust Gift Example: You and your spouse, ages 70 and 68, own a small commercial building worth around $250,000, double what you paid for it. You've always wanted to make a meaningful gift to The Nature Conservancy, so you decide to place the building into a unitrust that will pay 5% of the trust's value for your lifetime (initially from the rental income from the building, then a percentage of the proceeds of its sale). The remainder of the unitrust will go to The Nature Conservancy.
|Value of Property||$250,000||$250,000|
|Capital Gains Tax (@15%)||$0||$18,750|
|Net for reinvestment (before other sales costs)||$250,00||$231,250|
|Tax savings @ 33% rate||$33,660||$0|
*This example is based on a factor that changes monthly. Contact our office for a personal illustration based on the latest rates.
If you are interested in learning more about creating a charitable remainder unitrust, contact a Nature Conservancy gift planner at (877) 812-3698 or at firstname.lastname@example.org. You should also be advised by your own attorney with expertise in the area of charitable trusts and estate planning.
- There are many types of life-income gifts. Learn more.
- Discover the many types of gifts with The Nature Conservancy.
You can protect rainforests and other natural places by making a planned gift with The Nature Conservancy. Contact us today.