Benefit Family and Charity – Give It Twice Trust

Sam and Anna raised four children. Sam passed away last year and Anna rolled over Sam’s IRA. She now has an estate of $1.6 million. $800,000 is in her IRA and the balance in her home, CDs and mutual funds.Anna signs a one-life plus term of 15 years unitrust. She and Sam have supported the San Diego Rescue Mission for many years, and Anna would like to benefit her four children and the Rescue Mission. She changes the beneficiary designation of the IRA to the trustee of the unitrust. When Anna passes away, the $800,000 IRA is transferred to the unitrust, saving all of the income tax on the IRA. It is invested for a term of 20 years and pays out just over $800,000 to the children during that time. After the 15 years, approximately $1 million will be distributed to the Rescue Mission.

Each of the four children will receive almost $200,000 from the balance of the estate. Over a period of 20 years, each child will also receive $200,000 of income. Anna especially likes the way the plan is balanced. Each child receives principal when she passes away and then income for a term of years. Anna believes that this is a desirable plan for the children and will also, eventually, be a wonderful help to the Rescue Mission.

Charitable Remainder Trusts:

1. Bypass capital gains or income tax (when funded with appreciated assets or IRA assets)
2. Create a life income stream that may be higher than what you currently receive, and
3. Allow for a substantial charitable deduction for your gift to the Rescue Mission.

The costs of administering a trust are higher than a charitable gift annuity, and so we recommend that a minimum funding amount of $100,000 or more be used to establish your trust.

Two types of charitable trusts offer unique planning features:

Charitable Remainder Unitrusts

A Unitrust offers:

• Income payments for lifetime, and/or for a fixed term of up to 20 years.
• A choice of payouts based on trust net income, or a fixed percentage payout based on the trust revaluation each January 1.
• Potential for long-term growth of trust assets, free of capital gains tax.
• The capability to fund the trust with assets that are temporarily illiquid (real estate, family business, etc.)
• Portfolio diversification
• The opportunity to add to the trust during your lifetime

The individually managed Unitrust also provides the flexibility to invest solely for growth for a term of years, and then to convert its appreciated portfolio to higher yielding income instruments with no capital gains tax. This ability to build-up the trust value permits planning for future retirement and tuition needs while also making a substantial gift for ministry.

Charitable Remainder Annuity Trusts

An Annuity Trust’s primary benefit to the benefactor is its stable, predictable income. And, similar to the Unitrust, it offers professional portfolio diversification and management.

Compare the benefits of a Charitable Remainder Unitrust with a Charitable Remainder Annuity Trust. In the following benefits comparison, let us assume that the beneficiaries are aged 72 and 70, that their joint life expectancy is 20.9 years and that they contribute $100,000 in stock that cost them $50,000 to buy. In this example, you can see how the plans compare.

For further information and assistance, please contact Steve de Graaf in our Gift and Estate Design Services office.

Phone: 1-619-819-1758 (Steve de Graaf) or Email:

or complete our Confidential Reply Form

Write us: San Diego Rescue Mission, P.O. Box 80427, San Diego, CA 92138-0427