Charitable Remainder Unitrust
A charitable remainder unitrust is created by transferring assets to a trust that pays you (or another beneficiary if you wish) an amount that varies each year based on a fixed percentage of the principal in the trust as it is valued annually. The minimum fixed percentage for the trust must be at least five percent. As with other life income gifts, however, the higher the fixed percentage rate for the unitrust or longer the term of the unitrust the lower the charitable deduction.

Because the unitrust is a tax-exempt entity, any highly appreciated property contributed to the trust can be sold without paying any tax and then invested in a diversified portfolio to generate growth and income for the beneficiaries.

A donor establishing either a unitrust or annuity trust may elect for the payments to the person or persons who benefit from the trust to be for either the life or lives of the person or persons the donor chooses to receive payments from the trust or for a period of years, not to exceed 20 years. Trusts established for a period of years are known as "Term Trusts." A term trust may be established to provide income to a beneficiary for a limited number of years (not to exceed 20 years). At the end of the term, the balance of the trust will pass to a Masonic charity.

Income from a unitrust is taxed to the donor based upon the trust's investments. Therefore, a portfolio invested in tax-exempt or high growth securities will provide income to the beneficiaries at no tax or the lower capital gain rate.

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