A unitrust, which offers a variety of special features, gives you the
opportunity to create your own invstment program.
You establish a unitrust to provide yourself a
life income. The amount you receive is a set percentage of the current value of the
unitrust, determined annually. The percentage is based on your personal circumstances and
needs.
After your lifetime, the principal of your
trust goes to United Cancer Research Society to fulfill your desire to support our work.
To encourage your philanthropy, the federal government provides you with generous tax
benefits.
How a Unitrust Works
To create this plan, you irrevocably transfer cash, securities, or real estate to a
unitrust to be professionally managed by United Cancer Research Society. The trust then
pays you an income for life, determined by a fixed percentag you select at the start.
Example:
John, age 60, contributes $100,000 in cash to a unitrust, arranging to receive 7% of
the fair market value of the unitrust assets each year, payable quarterly. The first year
he's entitled to $7,000 (7% of $100,000). Each subsequent year the same process is
followed. However, as the value of his trust increases or decreases, so do his income
payments.
If you wish, you can arrange to have the trust
pay an income to a survivor (your spouse or other relative, for example).
Your income varies with the value of the
unitrust, but you receive the same percentage every year, even if th unitrust income is
less than that percentage. Any difference comes from capital gains or principal.
You can choose a unitrust with an income-only
option. If the actual income amount is below the stated percentage, you receive only that
amount. Deficiencies will be made up in later years, when the unitrust income exceeds the
stated percentage. This option is attractive, for example, if you want the unitrust to
hold some unproductive real estate until it can be sold at the best price and the funds
reinvested.
How Income Tax Savings
are Figured
In the year you create and fund a unitrust, you get a sizable income tax charitable
deduction. This is based upon the value of our right to receive the remainder of the trust
assets after your lifetime. The value is determined by official U.S. Treasury average
lifetime expectancy tables.
Example:
As John is 60 years old, according to the tables he is entitled to an income tax
charitable deduction of $31,624 on the $100,000 in cash he used to fund his unitrust. This
is deductible up to 50% of his adjusted gross income. Any excess is deductible over the
next five years.
(The U.S. Treasury tables used to
calculate charitable deductions for some new life income plans change monthluy. The
examples given here assume quarterly payments and an 8.6% charitable midterm federal
rate--unless otherwise noted. We'll be glad to furnish precise calculations in your case,
without obligation.)
Suppose John used appreciated securities to
fund the unitrust. He would pay no tax on the appreciation. For securities held long-term,
his contribution would be deductible up to 30% of his adjusted gross income. (In some
cases, the limit can be increased to 50%.) His deduction would be calculated on the
current market value of the securities instead of their lower cost basis. |
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The Benefits in Using This Flexible Plan
A unitrust offers many advantages:
A Life income
A hedge against inflation
Immediate tax savings
Freedom from investment worries
Avoidance of capital gains tax on
appreciated assets
used to fund the trust
Most importantly, you make a personal commitment of
a significant gift to United Cancer Research Society to help with its work.
We will be glad to explain how a unitrust can
satisfy your own special financial needs. Your inquiry is invited.
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