Charitable Remainder Trusts

A charitable remainder trust gift is an irrevocable gift that can provide significant future support to UNC Charlotte while potentially increasing the income of the beneficiary or beneficiaries. Beneficiary payments are either made throughout a beneficiary's lifetime or for a specific term of years (20 is the maximum allowed by law). The donor directs how the named charity will use the ultimate proceeds. There are two types of charitable remainder trust gifts: a charitable remainder unitrust or a charitable remainder annuity trust.

If your goal is to provide yourself, your spouse or other beneficiaries with an income stream that provides a hedge against inflation, you should consider a charitable remainder unitrust. The unitrust allows you to add to the trust principal at any time and pays annual income based on a fixed percentage (at least 5 percent) of the market value of the trust assets. As the value of the trust increases, you share in that appreciation by receiving a larger income distribution. By avoiding capital gains tax on the trust transfer, the entire value of the gift can be reinvested to benefit the named life beneficiary. The trust assets will not be taxable in the donor's estate as long as the beneficiaries are limited to the donor and/or their spouse.

If you would prefer to receive constant payments from your life income gift, you might consider a charitable remainder annuity trust. Like a charitable remainder unitrust, the annuity trust provides the donor with capital gains tax avoidance, immediate income tax deduction and the ability to designate how the funds will ultimately be used by the university. However, unlike the unitrust, the payment from an annuity trust is based on a percentage of the market value of the trust assets at the time it is funded, and the payment amount never changes. Additional contributions to an annuity trust are not permissible, and upon death, the principal is distributed to the university.

For more information or to determine which charitable remainder trust option works best for your financial goals, contact Director of Gift Planning Carl E. Johnson, Ph.D., CFP®, at (704) 687-7217 or e-mail.