Charitable Remainder Unitrusts
A Gift That Provides Income To You
For people with appreciated assets (stocks or real estate), a trust gift can provide an immediate boost to their income and a tax deduction. This is a great strategy, especially for people who have highly appreciated assets that are producing little income. The trust is funded by the asset, and it is professionally managed. At the time the trust is established the donor selects a rate of return from the trust. The trust pays out that percentage of the trust’s value on a regular schedule each year for the donor’s lifetime, and if desired, the lifetime of one beneficiary. Upon the donor’s (or beneficiary’s) death, the principle passes to The Maryland SPCA without any estate taxes.
The tax benefits of establishing a charitable remainder trust will vary depending upon the donor’s age at the time the trust is established, the payout rate desired, and whether there is a beneficiary. There is a $25,000 minimum to establish a charitable remainder trust if The Maryland SPCA is serving as the trustee. Each trustee will establish its own minimum gift amounts.
Example: Elizabeth and John Smith have stock worth $100,000 that was purchased 30 years ago for $15,000. The annual dividend rate has averaged 2 percent, or $2,000. The Smiths would like to increase their income but selling the stock will subject them to capital gains taxes. Instead, they donate the stock to The Maryland SPCA to establish a charitable remainder unitrust. The Smiths elected to receive a payout of 6 percent annually, which increases their income from the stock to $6,000. They also received a tax deduction based upon contributing $100,000. The Smiths end up with higher income that continues for their lifetimes, a substantial tax deduction, and the knowledge that they have helped a cause they care about deeply.
How to Proceed
About the examples: The examples are only illustrations of the benefits. In all cases, you should consult your adviser. The Maryland SPCA can provide detailed profiles tailored to your circumstances at no cost or obligation. Email or call David Drake, Director of Development, The Maryland SPCA at 410-235-8826, ext. 132 for more information.
The Maryland SPCA's Account Information
Bank: PNC Bank
Account Number: 21-46-001-5878953
DTC: 2616
Attn: Linda Derkach
