Charitable Remainder Trust

Individual Charitable Remainder Trusts offer donors great flexibility since they may be written to benefit more than two income beneficiaries and more than one charity and can be funded with nearly any asset, including cash, securities, real estate, and other property. They can also be written to operate for the life of the income beneficiary or a specific term of years. A charitable deduction is earned when the gift is funded.

Charitable Remainder Annuity Trusts provide fixed payments, very much like charitable gift annuities. Annuity trust payments are set as a fixed percentage of the initial value of the gift contributed to create the trust. When you establish an annuity trust, you must select a payout rate for the trust, and name the income beneficiaries and the term of the trust. The minimum legally permissible payout rate is 5 percent. An annuity trust must make all payments to the income beneficiary from its own assets. The annuity trust rate must be low enough to permit payment of the annuity amount with less than the total return earned by the trust, so as not to diminish principal too severely. However, income payments will only be affected if the value of the trust assets falls below the value of the fixed payments.

Annuity trusts cannot be built with later contributions.

Charitable Remainder Unitrusts provide income payments that vary and can actually grow over time. Later gifts can be added to the trust after it has been established. Payments are determined by the following formula: the unitrust payout rate (5 percent minimum) is multiplied by the total market value of the trust assets on the first business day of each year, and that amount is paid to the beneficiaries during that year. On the first business day of the next year, the trust assets are revalued, and again multiplied by the unitrust rate to determine the income due the beneficiaries during that year. If the trust assets have grown in value during the preceding year, payments in the next year will be higher; if the trust assets shrink, the payments will drop.

Minimum gift size: $50,000. Use our Gift Planning calculator to realize the benefits of your gift.

For additional information, contact the Office of Gift Planning at 570-577-3200 or giftplanning@bucknell.edu.