GIFT OF REAL ESTATE TO A CHARITABLE REMAINDER UNITRUSTGIFT OF REAL ESTATE TO A CHARITABLE REMAINDER UNITRUST

What is a Charitable Remainder Unitrust?

A CRUT is 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 remaining in the trust at the end of the trust’s term benefits the donor's choice of permanent funds at the Foundation benefitting charities or areas of charitable work recommend by the donor. Typically, the LCF acts as trustee for trusts established at the LCF, and in this capacity it assumes responsibility for administering all aspects of the trust, including sale of the real estate.

Target Audience

  • Clients 50 or older, but may be younger for a term of years trust.
  • Clients interested in additional income who can withstand market fluctuations.
  • Clients with significant assets.
  • Clients interested in converting real estate into a gift that provides a stream of ongoing income.
  • Clients who wish to give real estate and bypass associated gains.
  • Clients who may wish to make additional gifts to the trust at a later date.
  • Clients who are seeking ongoing income for longterm care or wealth replacement insurance premiums.

Tax and Financial Benefits for your clients

  • The trust beneficiary receives regular payments for life, term or years, or both.
  • The donor receives a charitable income tax deduction in the year of the gift based on the value determined by a qualified appraisal. The cost of the appraisal is paid directly by the donor to the appraiser.
  • For gifts of long-term appreciated real estate, 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


The gift minimum is $200,000 . The donor can also make multiple additional gifts of cash, securities, and/or real estate to the trust, which would increase the annual Unitrust distribution.

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 rate is calculated annually, based on the percentage in the trust agreement and the overall value of the trust’s assets. Payments begin in the calendar year following sale of the property. The donor(s) and certain family members are disqualified from purchasing the property according to law.

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 to 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 , Real Estate Worksheet and Environmental Questionnaire included in the illustration packet.

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