Gift Plan Details: Charitable Remainder Unitrusts
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Charitable gift annuities make fixed payments, starting either when the gift is made (an immediate-payment gift annuity) or at a later date (a deferred or flexible gift annuity). Some organizations maintain pooled income funds, which commingle donations, pay beneficiaries varying income depending on the earnings of the fund, and generally operate like a charitable mutual fund. Charitable remainder unitrusts and annuity trusts are individually managed trusts that pay the beneficiaries either a fixed percentage of trust income or a fixed dollar amount.
(Our handy Planned Giving Pocket Guide describes all planned gifts.)
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A unitrust is an individually managed charitable trust paying its beneficiaries income as a fixed percentage of the trust's value - which is revalued annually. Income and appreciation in excess of the required payments to the beneficiaries is held in the trust to allow growth. A unitrust pays income to its beneficiaries for their lifetimes, for a term of up to 20 years, or for a combination of both. A unitrust can have multiple beneficiaries.
The donor can make additional contributions to a unitrust. When the unitrust terminates - at the death of the last beneficiary or at the end of the trust term - the remaining balance is available to your organization to be used for the purpose that the donor specified when the gift was made.
(Our handy Planned Giving Pocket Guide describes all planned gifts.)
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The trustee is typically a financial institution or one or more individuals with investment and financial management expertise. Donors themselves may serve as trustee, so long as they keep the transactions of their charitable trust separate from their other investments. The charity that will benefit from the unitrust or annuity trust can serve its trustee. However, because of the relative complexity of managing investments to meet the beneficiaries' income objectives, plus complying with record-keeping and tax filing requirements, few non-profit organizations do serve as trustee, and data suggests that that number is declining.
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You've come to the right place. Purchase The Ultimate Quick Reference Planned Giving Pocket Guide that also comes with a fold-out "cheat sheet" titled When How and Why to Plan a Gift. At $24.95, it's a bargain. (Quantity discounts for staff, board members and volunteers.)
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