Planned Giving

Charitable Remainder Unitrust

You create a trust and income from the trust goes to the beneficiaries you specify. Beneficiaries receive income for life or for a specified number of years and, at the end of the trust term, the assets of the trust pass to Claflin University. The charitable remainder unitrust is a remarkably flexible planning vehicle. It can be structured to achieve a wide variety of personal and philanthropic goals.

• You may transfer cash, securities, real estate to the trust.
• The trust will pay you a predetermined percentage of its value each year.
• You can structure the trust for growth and then income.
• You may use the trust to diversify without a capital gain tax penalty.
• You may add to the trust in future years.
• You will receive an income tax deduction when you set up or add to the trust.

Example 1:

Fred and Gloria Cloud purchased growth stock for $20,000 ten years ago. It is now valued at $100,000, but the annual dividends are only $1,500. Now that they are both 67, they would like to augment their retirement income. To do this, they transfer the stock to a charitable remainder unitrust with a 6% payout rate.

In the first year, the Clouds will receive a $6,000 payment—four times the dividends they have been receiving—and those payments will increase in time if the assets of the unitrust appreciate in value. Moreover, they avoid tax on their profit in the stock and receive an income-tax deduction of $28,714. In their 33% tax bracket, this saves them $9,476 in income taxes (33% of $28,714). At the survivor's death the unitrust assets will be distributed to Claflin University.

Example 2:

Ruby and Joe McCullough, both age 54, own growth securities that they bought years ago for $50,000. The stock is now worth $250,000 and they would like to diversify their investments. They currently do not need additional income, but would like to provide more funds when they retire in about ten years. They decide to create an income-only unitrust that will pay them 5% of its value each year. The trust also provides that in years when the trust earns less than 5%, those shortfalls can be made up in future years if the trust earns more than 5%. As a result of creating the trust Ruby and Joe:

• Will receive an income tax charitable deduction of about $58,000
• Will avoid a potential capital gain tax liability of $30,000
• Can diversify their investments
• Will provide a significant gift to Claflin University.

The trustee can invest for growth over the next ten years and pay Ruby and Joe little income. In ten years, the trustee could invest for income and hopefully make up any shortfall in payments from the previous ten years.

To discuss planned giving options and how a planned gift might fit your personal and financial objectives, please contact:

Sunya L. Young
Director of Planned Giving
Division of Institutional Advancement
400 Magnolia Street Orangeburg, SC 29115
Phone: (803)535-5704; Toll Free: (888)223-7103; Fax: (803)535-5371
E-mail: syoung@claflin.edu

The information provided on this website is for informational purposes only and is not intended as legal, tax or investment advice. Please consult your accountant, financial advisor or attorney to assist you in determining which planned giving option is most appropriate given your financial goals and objectives.