Example

Audrey Chen is 76 years old and her husband John is 75. Many of the stocks in their portfolio have appreciated substantially in value over the many years the Chens have owned them. They are enthusiastic about making a major gift to support charity_name, but they also would welcome a way to receive greater income from their investments without paying a big capital gains tax.

After consulting with their advisor, the Chens find that a 5% charitable remainder unitrust funded with $500,000 in assets will meet their needs perfectly. They fund their unitrust with $400,000 in stocks plus $100,000 from a money market fund. They paid a total of $75,000 for the stocks, which currently produce about 2% in dividends each year. Their money market fund has been earning about 2% interest annually.

Benefits

• The Chens will receive $25,000 in payments in the first year of their unitrust, significantly increasing the income they had been receiving from these assets. If the income and appreciation of the trust's investments, net of costs and fees, total 7% annually, their payments will grow to over $33,647/year* in 16 years.
• The Chens will receive an immediate income tax charitable deduction of about $241,160**.
• The Chens' trustee will be able to sell their stock immediately in order to diversify their unitrust's investments without paying any capital gains tax.
• Assuming its investments earn a 7% net annual return on the unitrust's investments, over $686,393* will be left in the Chens' unitrust to support charity_name when their unitrust terminates.

*The future payment amounts and principal amount remaining for charity_name will be lower if the Chens' unitrust earns less than 7% annually.
**The Chens' income tax charitable deduction will vary slightly depending on the timing of their gift.