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For more information
on ways to leave a lasting
legacy at Cardinal Glennon
Children’s Medical Center,
please call the
Office of Development at
314.577.5605 or
800.269.0552.
You may also email us at
info@glennon.org
All inquiries will remain
confidential.
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The Unitrust: A Flexible Investment Plan
A Unitrust can be considered a win/win/win gift because of its many
benefits. It provides you with a charitable tax deduction (tax avoidance too
if funded with appreciated assets,) provides you (and/or your heirs) with a
lifetime or term-of-years income, and finally gives you the satisfaction of
supporting the work of Cardinal Glennon Children’s
Medical Center.
The amount of life income received from a Unitrust is a fixed percentage of
the current value of the Unitrust. The value of the Unitrust is determined
annually - the percentage is based on your personal circumstances and needs.
The minimum payout rate is 5%.
After your lifetime, the principal of your trust is conferred to the
hospital.
How a Unitrust Works
To create this plan, you irrevocably transfer cash, securities or real
estate to a Unitrust. The trust then pays you an income for life, determined
by a fixed percentage you select at the start.
Example: John, age 60, contributes $100,000 in cash to a Unitrust, arranging
to receive 7% of the fair market value of the Unitrust assets each year,
payable quarterly. The first year he's entitled to $7,000 (7% of $100,000).
Each subsequent year the same process is followed. However, as the value of
his trust increases or decreases, so do his income payments. (Many younger
donors choose a 5% payout rate so that as the corpus grows, the payments
keep pace and/or beat the rate of inflation.)
How Income Tax Savings Are Figured
In the year you create and fund a Unitrust, you enjoy a sizable charitable
income tax deduction. The deduction is based upon the value of the
hospital's right to receive the remainder of the trust assets after your
lifetime. The value is determined by official U.S. Treasury average lifetime
expectancy tables.
Example: John is 60 years old. According to the table he is entitled to an
income tax charitable deduction of $29,693 on the $100,000 in cash he used
to fund his Unitrust. This is deductible up to 50% of his adjusted gross
income. Any excess is deductible over the next five years.
Suppose John used appreciated securities to fund the Unitrust. He would pay
no tax on the appreciation. For securities held long-term, his contribution
would be deductible up to 30% of his adjusted gross income. His deduction
would be calculated on the current market value of the securities instead of
their lower cost basis.
Benefits of Establishing a Unitrust:
1. Income for a term of years or for the rest of one’s life (lives.)
2. Immediate charitable tax deduction savings.
3. A possible hedge against inflation.
4. Freedom from investment worries.
5. Avoidance of capital gains tax if appreciated assets are used to fund
the trust.
6. The pleasure of knowing that your gift ultimately will benefit the
children served by Glennon.
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