The Advantages of a Charitable Remainder Trust
If you have built a sizeable estate and also are looking for ways to receive reliable payments, consider a charitable remainder trust.
These types of gifts may offer you tax benefits and the option for income. There are two ways to receive payments and each has its own benefits:
The annuity trust pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in trust investments.
The unitrust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.
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An Example of How It Works
Susan wants to make a gift to William Penn University but would also like more income in the future. Susan creates a charitable remainder unitrust with annual lifetime payments to her equal to 5% of the fair market value of the trust assets as revalued annually. She funds the trust with assets valued at $500,000.
Susan receives $25,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual valuations of the trust assets. She is eligible for a federal income tax charitable deduction of $301,905* in the year she creates and funds the trust. This deduction saves Susan $96,610 in her 32% tax bracket.
*Based on a 3.6% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
- Contact Marsha Riordan at 641-673-1045 or email to talk about supporting William Penn University by setting up a charitable remainder trust.
- Seek the advice of your financial or legal advisor.
- If you include William Penn University in your plans, please use our legal name and federal tax ID.
Legal Name: William Penn University
Address: Oskaloosa, IA
Federal Tax ID Number: 42-0707120