The Charitable Remainder Trust
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 will benefit any University of Rochester program you choose.
For example, George and Mary Carlson 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 age 65, they would like to augment their retirement income. To do this, they transfer the stock to a charitable remainder unitrust with a 6 percent payout rate.
In the first year, they 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 they receive an income-tax deduction of $28,875. In their 33 percent tax bracket, this saves them $9,529 in income taxes (33 percent of $28,875).
When the last beneficiary dies, the unitrust assets will benefit any University of Rochester program you choose.
