Charitable Remainder Unitrust

Also known as a CRUT or Unitrust, this is an irrevocable transfer of assets from a donor or donors to a trust.  It is a special vehicle approved by the Internal Revenue Service that allows individuals to make a charitable gift, receive charitable deductions, and yet receive the income from the gift for life (or lives) or for a term of years.  At the termination of the trust any remaining funds are transferred free of the trust to the charity or charities designated by the donor when the donor established the trust.  Because the assets eventually go to a charity, special tax benefits are available at the time of the gift by the donor.

Illustration:

Mr. Smith transfer $100,000 to fund a Charitable Remainder Unitrust.  He chooses to receive eight percent (8%) of the fair market value of the unitrust assets each year (payable quarterly).  The first year, Mr. Smith receives $8,000. One year later, the trust assets are worth $110,000.  Mr. Smith receives $8,800 for the upcoming year ($110,000 x 8%). If the assets are worth $120,000 the following year, (Mr. Smith will receive $9,600 for that year ($120,000 x 8%) and so on, each year after his life. Following his death the North Carolina Baptist Foundation will distribute the income from the CRUT to the causes Mr. Smith named as beneficiaries – International Mission Board, First Baptist Church and the Baptist Children’s Home.

The Foundation will provide calculations and full analyses of your gift for tax reporting purposes, as well as work with your financial advisor to analyze the best giving plan for you and your family.