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If you have built a sizable estate and also are looking for ways to receive reliable payments, consider a charitable remainder trust. This type of trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create. At the end of the trust term, the balance in the trust goes to Cal Poly.
These types of gifts may offer you tax benefits and the option for income. There are two ways to receive payments and each has its own benefits:
The annuity trust pays you, each year, the same dollar amount you choose at the start. Your payments stay the same, regardless of fluctuations in trust investments.
The unitrust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. The amount of your payments is redetermined annually. If the value of the trust increases, so do your payments. If the value decreases, however, so will your payments.
Susan, 75, wants to make a gift to Cal Poly but would also like more income in the future. Susan creates a charitable remainder unitrust with annual lifetime payments to her equal to 5% of the fair market value of the trust assets as revalued annually. She funds the trust with assets valued at $500,000.
Susan receives $25,000 the first year from the trust. Subsequent payment amounts vary each year depending on the annual valuations of the trust assets. She is eligible for a federal income tax charitable deduction of $300,540* in the year she creates and funds the trust. This deduction saves Susan $95,173 in her 32% tax bracket.
*Based on a 2.0% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
Submit a few details and see how a charitable remainder trust can benefit you.
Legal name: California Polytechnic State University Foundation
Address: Heron Hall, Building 117, San Luis Obispo, CA 93407-0444
Federal tax ID number: 20-4927897
See which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From Two Ways to Donate.