Charitable Remainder Unitrust
Would you like to receive more income from your investments, but you hesitate to make changes because you know the capital gains tax would reduce your portfolio? Consider making a generous contribution to support the next generation through a charitable remainder unitrust. Charitable remainder unitrusts allow you to improve your investment income without triggering capital gains tax while you make a significant contribution to NIU Foundation.
Because a charitable reminder unitrust is tax-exempt, you can give appreciated assets to your trust without paying capital gains tax. Your trust will pay no capital gains tax when it sells and reinvests those assets, which means it can put the full appreciated value of your investments to work producing income for you.
Then, at the end of your lifetime, your charitable remainder unitrust will distribute the remainder in your trust to NIU Foundation. Your generous gift to NIU Foundation means that you receive an income tax charitable deduction now for a portion of your gift to your trust.
Notes:
The payout percentage is negotiated at the time the charitable remainder unitrust is created and does not change, but the amount of income paid will change each year with the value of the trust’s assets.
You may name one or more individuals to receive income from your trust.
You can make additional contributions to your trust at any time.
Example:
Barb is 76 years old, and her husband Bob is 75. The investments in their portfolio have appreciated substantially over the years, even though the amount of income they collect has been disappointing. However, they have been reluctant to make investment changes because they know that when they sell their investments, they will owe capital gains tax on the increase in value.
One of their stocks, now worth $500,000, pays $10,000 per year in dividends, which was a generous return when they purchased the stock for $50,000 years ago. They know that if they sell this stock they will have a $450,000 profit on the sale and have to pay a capital gains tax of $67,500, perhaps more.
Instead of selling, Barb and Bob create a charitable remainder unitrust and give their stock to their trust. The charitable remainder unitrust can sell the stock with no capital gains tax and will pay them 5% of the trust’s market value each for as long as either of them lives and then distribute whatever is left to NIU Foundation.
Your circumstances are unique. We encourage you to consult with your own advisors about how a charitable remainder unitrust could work for you. Thank you for your continued commitment to support NIU and create meaningful legacies.
