Reminder of Trust

When the trust ends, the property remaining in the trust passes to the charity, specifically to the Oakland Family Services endowment fund at the Community Foundation for Southeastern Michigan. Instead of making a bequest in your will, you "accelerate" your charitable gift by means of a trust. You are entitled to a substantial income tax charitable deduction the year you establish the trust.

There are two types of charitable remainder trusts:  the charitable remainder annuity trust and the charitable remainder unitrust.  Both types provide for payments to one or more individuals for life or for a specified period of years, with the principal ultimately passing to Oakland Family Services.

The annuity trust must provide a fixed amount annually to you or an income beneficiary designated by you. The income must equal at least 5% of the amount you placed in the trust. The income payment you receive does not change, and additional gifts may not be made to the annuity trust after its creation.

The unitrust pays a fixed percentage (5% minimum) not of the amount you place in the trust, but of the fair market value of the trust assets. Because the value of assets can be expected to change from year to year, the unitrust payment will vary in amount each year. If the value of the unitrust increases, the payout will likewise increase. Decreases are also possible, although it is expected that over the years the principal will grow; thus the income to the donor or designated beneficiary will grow as well. Additional contributions may be made to the trust after it is established.


Considerations and Benefits of a Charitable Remainder Trust

  • There can be increased income for you and your family.
  • Capital gains on gifts of appreciated securities are avoided. The charitable tax deduction calculation is based on the full fair market value.
  • Future income is favorably taxed.
  • Estate tax savings.
  • Income may be diverted to a family member in a lower tax bracket.

Who Might Be Interested in Giving Through Charitable Remainder Unitrusts?

  • Donors who could afford an outright gift but are concerned about future income needs.
  • Donors who want a variable, market-driven income but prefer to preserve the trust corpus for a significant gift to the charity.
  • Donors who wish to fund the trust with an appreciated asset, thereby avoiding capital gains taxes.
  • Donors who want a significant tax deduction but wish to defer the income until a later time.
  • Donors who wish to establish a trust for a limited period to pay for their children's or grandchildren's education.
  • Donors who wish to diminish estate taxes.

Who Might Be Interested in Giving Through Remainder Annuity Trusts

  • Donors who want a fixed income for life.
  • Donors who want a large immediate income tax deduction. 
  • Donors who wish to avoid capital gains tax.
  • Donors who wish to replace a low yield asset and make a future charitable contribution at the same time. 
  • Donors who are either highly compensated or have a high level of taxable income from other sources.


Want to Know More?

 For more information call the Oakland Family Service Development Department at (248) 858-7766, ext. 1203 or email at: kbenton@ofsfamily.org. The information presented is for educational purposes and should not be considered as tax or legal advice. Donors should consult with their professional advisors.