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 Physical Therapy. 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.
- Immediate income tax charitable deduction (typically 30 to 50 percent of the trust’s initial value).
- Avoidance of capital gains tax on the transfer of the asset if the trust is funded with appreciated assets.
- Potential for increased income – often as much as two to three times the income earned from the contributed asset.
- 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 firstname.lastname@example.org.