A charitable remainder trust is a gift arrangement defined by federal tax law that allows you to provide income to yourself or others for life or a term up to 20 years while making a generous gift to Medical Foundation of NC, Inc. for the benefit of the UNC-Chapel Hill Division of Clinical Laboratory Science. You transfer property irrevocably to a trust and specify how the income and principal are to be distributed. The trust can become effective during life or at your death.

Benefits

1. Immediate income tax charitable deduction (typically 30 to 50 percent of the trust’s initial value).
2. Avoidance of capital gains tax on the transfer of the asset if the trust is funded with appreciated assets.
3. Potential for increased income – often as much as two to three times the income earned from the contributed asset.
4. Removal of the asset from your estate for federal estate tax and probate fee calculations.

Types of Trusts

There are two types of charitable remainder trusts.

A charitable remainder unitrust (CRUT) is a trust that pays a variable income based upon a percentage of the fair market value of the trust's assets, revalued annually. The Internal Revenue Code provides three variations of a unitrust – a standard unitrust, a net income unitrust, and a FLIP unitrust.

A charitable remainder annuity trust (CRAT) is a trust that pays a fixed dollar amount each year calculated by multiplying the trust payout rate (%) by the original market value of the trust. In an annuity trust, your payment never changes.

Click here to compare the benefits of creating a charitable remainder trust to other estate and life income gifts. For more information, please contact Kyle Gray at (919) 966-3352 or kyle_gray@med.unc.edu.