Charitable Remainder Unitrust

A charitable remainder unitrust is a gift plan that allows you to provide income to yourself or others while making a generous gift to Chatham University. The income may continue for the lifetimes of the beneficiaries you name, a fixed term of not more than 20 years, or a combination of the two.

As a unitrust donor, you irrevocably transfer assets, usually cash, securities, or real estate, to a trustee of your choice, such as Chatham University or a bank trust department. During the unitrust’s term, the trustee invests the unitrust’s assets. Each year, the trustee distributes a fixed percentage of the unitrust’s current value, as revalued annually, to your income beneficiaries. If the unitrust’s value goes up from one year to the next, its payout increases proportionally. Likewise, if the unitrust’s value goes down, the amount it distributes also goes down. The payments must be between 5% and 50% of the trusts initial value and are made out of trust income, or the trust principal if income is not adequate. When the unitrust term ends, its principal passes to Chatham University, to be used for the purpose you designate. You may add funds to your unitrust whenever you like.

Benefits of a charitable remainder unitrust

• The income beneficiaries you name will receive an annual income for life, or for the period you designate.
• You will qualify for a federal income tax deduction.
• If you fund the unitrust with an appreciated asset and the trust sells it, there will be no immediate tax on the capital gain. If you were to sell such an asset yourself, you would owe tax on all the capital gain realized in the sale.
• You may add to the trust in the future, unlike a charitable gift annuity.
• Your estate may enjoy reduced probate costs and estate taxes.
• You will provide generous support of Chatham University.
• Your gift will benefit from expert asset management, provided by the same professionals who manage the College’s endowment.

Example of a charitable remainder unitrust:
Sally S., class of 1947, irrevocably transfers $50,000 in cash to Chatham University. Sally elects for a 6% payout rate and receives $3,000 in income the first year—her future income will vary with the trust value. If she chooses, Sally may add to the trust in the future to increase its value and therefore increase her income. Sally also receives a $27,938 charitable deduction in the year that she makes the gift. Finally, Sally is able to support, in a major way, a Chatham program in which she is especially interested and benefit from professional management of her assets.