Help Further Our Mission With a Planned Gift.
A gift to HopeHealth in your will or trust, or by beneficiary designation, can help ensure our exceptional care and services are available today and for years to come. Learn how today!
Charitable Remainder Trust
A charitable remainder unitrust (CRUT) provides income for life (or a term of years) while creating a future gift to HopeHealth.
Unlike an annuity trust, unitrust payments can grow over time. Because payments are based on a percentage of the trust’s annually revalued assets, income may increase if the trust grows—offering potential protection against inflation.
A CRUT may be right for you if:
- You want income for yourself or others.
- You would like the possibility of growing payments.
- You want to reduce income or capital gains taxes.
- You prefer to choose your own trustee.
- You are considering a gift of $100,000 or more.
How It Works
A CRUT is a separate, tax-exempt, irrevocable trust. You transfer assets to the trust and appoint a trustee to manage investments and administer payments.
Once funded, the gift cannot be reversed. When the trust ends, the remaining assets support HopeHealth.
Variable Payments
Each year, the trust distributes a fixed percentage (at least 5%) of its current value.
- If the trust grows, payments increase.
- If the trust declines, payments decrease.
Typical payout rates range from 5% to 6%. Payments may last for one or more lives, up to 20 years, or a combination of both.
You may name yourself, your spouse, or others as income beneficiaries.
Flexible Planning Features
A unitrust can be structured with special provisions—such as a “net income” limitation—making it suitable for real estate or other assets that may take time to sell.
Additional contributions may be added later, generating new charitable deductions and increasing future income.
Tax Advantages
A CRUT may provide:
- An immediate income tax charitable deduction
- Avoidance of capital gains tax when funding with appreciated assets
- Tax-free growth inside the trust
- Potential reduction of estate taxes
Payments are generally taxed as ordinary income, though portions may be taxed as capital gains or, in some years, partially tax-free depending on trust performance.
Assets to Consider
Common funding options include:
- Cash or low-yield savings
- Appreciated securities
- Debt-free real estate or other illiquid assets
A unitrust can convert appreciated property into diversified investments and variable lifetime income.
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EXAMPLE
Mary Gray is 76 years old and her husband John is 75. Many of the stocks in their portfolio have appreciated substantially in value over the many years the Grays have owned them. They are enthusiastic about making a major gift to support HopeHealth, but they also would welcome a way to receive greater income from their investments without paying a big capital gains tax.
After consulting with their advisor, the Grays find that a 5% charitable remainder unitrust funded with $500,000 in assets will meet their needs perfectly. They fund their unitrust with $400,000 in stocks plus $100,000 from a money market fund. They paid a total of $75,000 for the stocks, which currently produce about 2% in dividends each year. Their money market fund has been earning about 2% interest annually.
Benefits
- The Grays will receive $25,000 in payments in the first year of their unitrust, significantly increasing the income they had been receiving from these assets. If the income and appreciation of the trust's investments, net of costs and fees, total 7% annually, their payments will grow to over $33,647/year* in 16 years.
- The Grays will receive an immediate income tax charitable deduction of about $240,960**.
- The Grays' trustee will be able to sell their stock immediately in order to diversify their unitrust's investments without paying any capital gains tax.
- Assuming its investments earn a 7% net annual return on the unitrust's investments, over $686,393* will be left in the Grays' unitrust to support HopeHealth when their unitrust terminates.
*The future payment amounts and principal amount remaining for HopeHealth will be lower if the Grays' unitrust earns less than 7% annually.
**The Grays' income tax charitable deduction will vary slightly depending on the timing of their gift.
Take the Next Step
If you would like income that has the potential to grow—while making a meaningful future gift—a charitable remainder unitrust may be an ideal solution. We would be pleased to prepare a personalized illustration showing projected payments and tax benefits.
Contact us today to explore how a unitrust can fit into your financial and philanthropic plan.