CHARITABLE REMAINDER UNITRUSTCHARITABLE REMAINDER UNITRUST

What is a Charitable Remainder Unitrust?

A trust that makes regular payments based on a percent of the trust’s assets. These payments, which can be made to the donor or other named income recipient, can be for life, a term of up to 20 years or both. The amount of the annual payments will go up and down based on market performance. The amount remaining in the trust at the end of the trust’s term will go to the donor's choice of funds at the LCF, benefiting charities or areas of charitable work recommended by the donor. 

The gift minimum is $100,000 for cash and/or publicly traded securities/mutual funds, and $200,000 for real estate or closely held stock. The donor can make multiple gifts. (If a gift of real estate is being considered, contact the LCF for additional information regarding FLIP unitrusts.)

Target Audience

  • Clients 50 or older (but may be younger for a term of years trust).
  • Clients interested in additional income.
  • Younger clients (50+) who can withstand market fluctuations.
  • Clients with significant assets.
  • Clients interested in converting an existing asset into a gift that provides a stream of ongoing income.
  • Clients who wish to give appreciated stock and/or real estate, and bypass associated gains.
  • Clients who may wish to make additional gifts to their trust at a later date.
  • Clients who have maxed out qualified retirement plan contributions, but still need additional retirement income.
  • Clients with stock who are seeking ongoing income for longterm care or wealth replacement insurance premiums.

Tax and Financial Benefits of Creating a Charitable Remainder Unitrust

  • The trust beneficiary receives regular payments for life, term of years, or both.
  • The donor receives a charitable income tax deduction in the year of the gift.
  • For gifts of cash, the annual deduction limit is 50% of the donor’s AGI.
  • For gifts of long-term appreciated securities, the annual deduction limit is 30% of the donor’s AGI.
  • Unused charitable deductions may be carried over an additional 5 years.
  • The unitrust sells appreciated assets tax-free – 100% of the gift is reinvested to produce income.
Payment recipients. Payments can be paid to the donor, a relative or friend, and are taxable as income. There may be estate/gift tax consequences if someone other than the donor or the donor’s spouse is named as an income recipient.

Benefits to you, the Professional Advisor

LCF will support you with a full range of charitable products and services, and you'll be compensated for your efforts by Thrivent or American Funds. (details)


More about Charitable Remainder Unitrusts

Unitrust payout rate. In determining a payout rate, the LCF looks to various factors, including the current economy, the prevailing IRS discount rate and the age of the trust income beneficiaries. Once the percentage has been set in the signed trust document, it cannot be changed. The variable annual payment is calculated annually, based on the percentage in the trust agreement.


How to Establish a Charitable Remainder Unitrust at the LCF

  1. Request a personalized illustration for your client using our online request form or call 800-365-4172 and speak to a Gift Planner.  To create a customized illustration for your client, we need the following information:
    • Client's name, birthdate and tax bracket.
    • Proposed gift amount, including cost basis.
  2. The Foundation sends you an illustration packet to review with your client.
  3. If your client wishes to proceed and establish a unitrust, complete and return the Charitable Remainder Trust Application, IRS Form W-9 and Fund Workbook included in the illustration packet.
    • If the client is giving cash, please do not send any money at this time.
    • If the client wishes to give stock, include copies of either the stock certificates or the most recent brokerage statement. LCF will contact you with specific instructions on how to transfer the stock.

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