Charitable Remainder Trust

ways to give (web)Individuals wishing to retain either for themselves or another an income interest in their gift to Foxcroft Academy may consider establishing a charitable remainder trust, which would provide a stream of payments for life or a set term of years to a designated beneficiary or beneficiaries.

There are two basic types of charitable remainder trusts: the charitable remainder unitrust which pays a fixed percentage of the value of the trust as revalued annually, and the charitable remainder annuity trust which pays a set dollar amount annually. The payout from the unitrust will vary from year to year; the payout from the annuity trust remains constant. All payments, whether from a unitrust or an annuity trust, are made solely from the assets of the trust. In general, to establish a charitable remainder trust with the Trustees of Foxcroft Academy as trustee requires a minimum gift amount of $50,000. Charitable remainder trusts can also be established with an individual or corporate trustee.

With a unitrust, money or property is irrevocably transferred to a trustee, with instructions to make payments to one or more individuals annually, either for life or a term of years. The payments will be a fixed percentage of the trust’s value, as revalued annually. Thus, the size of the payments will vary from year to year. Additional gifts may be made to a unitrust. Generally, the higher the payout set by the donor, the lower the tax deduction will be. On the death of the beneficiary(ies) or upon the expiration of the term of years, the remaining trust assets will pass to Foxcroft Academy to be used for the purpose originally designated by the donor.

An annuity trust, like a unitrust, is separately invested. Unlike a unitrust, however, it pays out a fixed payment, as opposed to a variable payment. It is valued only once, when the trust is initially established, and a certain percentage of this amount (at least 5 percent) is distributed annually to a named individual or individuals for life or a term of years. Additional gifts cannot be made to an annuity trust.

By designating the Trustees of Foxcroft Academy as the remainder beneficiary of either a charitable remainder unitrust or annuity trust, you will receive a charitable income tax deduction and, in addition, can save on estate tax and probate costs. Most important of all, however, you will have made a gift of significance to Foxcroft Academy.

  Back to top