Charitable Remainder Unitrust

The Charitable Remainder Unitrust is a life income plan. You contribute an asset to an irrevocable trust and you, or someone you name, receive income for life.

When you, or those you have named, pass on (or after a term of years) the amount left in the trust - the remainder - goes to charity.

You can even start these trusts through your estate.

In addition to income for life, you receive several other benefits:

  • You make a major contribution to charity.
  • You receive an immediate income tax deduction for your gift.
  • You pay no capital gains tax when you give appreciated assets.
  • The estate pays no tax, even though you, or a loved one, receive life income.

Because of the significant capital gains savings, a charitable remainder trust is an excellent option if you own property that has appreciated in value.

You will make several selections in establishing your trust:

  1. Choose the type of trust.
  2. Set the payout rate by determining how much income you want the trust to generate.
  3. Pick a charity (or charities) to receive the remainder.
  4. Choose who will serve as trustee.

The Rochester Area Foundation will act as trustee at no cost to you. A financial institution would charge as much as 2%. The Foundation will pass on the investment management fee and the cost of the tax return (generally around one-half percent) to the trust. As you can see, you can save significantly by using Rochester Area Foundation as trustee.

When serving as trustee, Rochester Area Foundation requires that when the trust terminates, at least, one-half of the remainder go to one of the following: 

  • the Foundation's programs or an Endowments for Community Excellence Fund,
  • a field-of-interest fund at Rochester Area Foundation for a cause or region you care about
  • a designated fund at Rochester Area Foundation for your favorite charity.

Designated and field-of-interest funds created by the trust termination may be named for you or someone you choose to honor.

When you create a Charitable Remainder Trust, Rochester Area Foundation will enroll you in our legacy society, the Community Heritage Society (if you choose), which honors those who make lasting gifts to the community. Find out more about the Community Heritage Society.

A Comparison: Life Income Plan Versus Selling the Stock

  Life Income Plan Conventional Stock Sale
Amount of stock $1,000,000 $1,000,000
Capital gains taxes paid $0 $200,000
Income tax savings $100,500 $0
Proceeds of stock reinvested $1,000,000 $800,000
First year income (6% of principal) $60,000 $40,800
Total philanthropic legacy $1,000,000 $0