« back
Charitable Remainder Trusts
Charitable remainder unitrusts and charitable remainder annuity trusts provide annual income for the life of the donor or a certain number of years. Trusts may be funded with gifts of cash, securities or real estate. In return, the donor and/or another beneficiary receive annual income based on a percentage of the trust principal or a fixed dollar amount.
Unitrust income will fluctuate with ordinary economic conditions. Annuity trust income is fixed at the date of the gift and never changes. At the death of the beneficiaries or at the end of the term, the trust ends and the principal is used by Wake Forest for purposes previously determined by the donor.
Trusts may be created during one's lifetime or by will. A contribution to establish a trust provides an immediate charitable contribution deduction. Funding a trust with long-term appreciated property allows a donor to avoid capital-gains tax, and there are also estate tax advantages.
Because of the various tax benefits and the possibility of reinvestment of assets at a higher yield, spendable income may be more than before the gift was made.
EXAMPLE CALCULATION
Gift of appreciated securities made by a couple, age 55, originally purchased for $25,000, now valued at $100,000, to a charitable remainder unitrust
Gift to Wake Forest | $100,000 |
Annual income at 5% return
(Future income will vary with trust value.) | $5,000 |
Charitable income tax deduction in year gift made | $25,282 |
Capital gains tax | $0 |
