Charitable Remainder Trusts

Charitable Remainder Unitrust (“Unitrust”)

With a Unitrust, the gifted assets (e.g. cash, stock, etc.) are invested and the named income beneficiaries receive the income for their lifetime or a set term of years, up to twenty. The trust pays a percentage of the principal revalued each year but not less than 5%. One of the features of a Unitrust is that additional gifts can be added to it.

Since the income is based on the principal value each year, the income can increase or decrease based on the trust’s investment performance. Since a Unitrust is separately managed it usually requires a larger gift (e.g. $100,000 or more) to be economical in terms of management fees and expenses.

Charitable Remainder Annuity Trust (“Annuity Trust”)

Not to be confused with a Charitable Gift Annuity (which has a somewhat similar name), gifts to an Annuity Trust (e.g. cash, stock, etc.) are invested and the named income beneficiaries receive a fixed income (no less than 5%) for their lifetime or a set term of years, up to twenty. Unlike a Unitrust, each year the Annuity Trust pays a fixed percentage of the initial value of the donated assets.

Additional gifts cannot be made to an Annuity Trust. Since an Annuity Trust is separately managed it usually requires a larger gift (e.g. $100,000 or more) to be economical in terms of management fees and expenses.