If retirement seems like a lifetime away, think again: It will be here before you know it! An estate planning tool called a charitable remainder unitrust could be a wise way to plan ahead for your best years yet.
How It Works
With a typical charitable remainder unitrust:
- You give assets to a trust you create for charity and immediately begin to receive an income from that trust for life.
- You select a payout rate for your income-often 5 percent to 7 percent-when you establish the trust.
- The dollar amount of your payment is determined by the annual value of the trust multiplied by your payout rate.
Special versions of the unitrust can also provide flexibility that allows you to put amounts in the trust and be paid very little-at least initially-from the trust. You place money in the trust as often as desired, receive little income during your working years and then have the option of receiving a larger income later, perhaps at retirement, by changing the trust's investment strategy. This allows the trust assets to build without taxation during your working years, which provides a larger asset base for income to be paid during retirement.
Your Advantages
Income tax deduction. You receive a charitable deduction based in part on your age at the time of the gift.
Greater income. The assets in the trust grow tax-free, just as they would in a retirement account. Because the trust pays no income and capital gains taxes, more income is available during your retirement years. Note that trust distributions are subject to tax to the recipient.
Flexibility. You can name a spouse (and others) as an additional income beneficiary.
An eventual gift. Your selected charities will receive what remains in the trust at the death of the last income beneficiary.
Contact Us
We would be happy to assist you in your charitable planning. Contact our Development Office at 323-761-8704 or development@jewishfoundationla.org to learn more about options that may work for you.
This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the editor and contributors are not engaged in rendering legal, accounting or other professional services. Therefore, the contents should not be applied as legal or financial advice.