Charitable Remainder Unitrust

What is a Charitable Remainder Unitrust?
A charitable remainder unitrust ("unitrust") is a gift plan defined by federal tax law that allows you to provide income to yourself or others for life or a term of years while making a generous gift to Northland College.

As a unitrust donor, you irrevocably transfer assets, usually cash, securities, or real estate, to a trustee of your choice (for example, Northland College or a bank trust department). During the unitrust's term, the trustee invests the unitrust's assets. Each year, the trustee pays a fixed percentage of the unitrust's value, as revalued annually, to one or more income beneficiaries named by you. Payments must be at least 5% of the trust's annual value and are made out of trust income, or trust principal if income is not adequate. Payments may be made annually, semiannually, or quarterly.

When the unitrust term ends, the unitrust's principal passes to Northland College, to be used for the purpose you designate.

Example:
You irrevocably transfer $250,000 in long term appreciated property with a cost basis of $100,000 to a unitrust that pays 5% of its value each year for the lifetime benefit of an individual, age 78.

Benefits

• You will qualify for a federal income tax deduction of approximately $162,010. Your deduction may vary modestly depending on the timing of your gift.
  Note that deductions for this and other gifts of long term appreciated property will be limited to 30% of your adjusted gross income. You may, if necessary, take unused deductions of this kind over the next five years, subject to the same 30% limitation.
• Your designated income beneficiary will receive payments in quarterly installments for life. In the first year, these payments will be approximately $12,500. Payments in future years will vary with the value of the unitrust.
• Your entire gift property will be available for reinvestment, free of tax on your $150,000 of long term capital gain. If you were to sell and reinvest this property yourself, you would owe tax on $150,000 of long term capital gain.
• Your estate may enjoy reduced probate costs and estate taxes.
• You will provide generous support of Northland College.
• Your gift will benefit from expert asset management, provided by the same professionals who manage Northland College's endowment.

To learn more about how you can include Northland College in your estate planning, contact Kristy Liphart, interim vice president of institutional advancement, at (715) 682-1496  kliphart@northland.edu or Lois Albrecht, director of gift planning, at (715) 682-1394 lalbrecht@northland.edu

These calculations are for illustration purposes only and should not be considered legal, accounting, or other professional advice. Your actual benefits may vary depending on the timing of the gift.