There are some advanced estate planning techniques that can be implemented to great benefit when certain circumstances exist. People who are looking for a way to give something to charity while enjoying an ongoing stream of income simultaneous to realizing tax benefits may want to consider funding a charitable remainder unitrust.
The grantor of the trust is usually going to act as the non-charitable beneficiary because this beneficiary will be receiving annuity payments either annually or on a more frequent basis. These annuity payments are required to equal no more than 50% of the corpus and no less than 5%.
The tax savings begin when you fund the trust. You are effectively removing assets from your estate when you place them into the CRUT, and as a result you are reducing your estate tax liability.
You decide on a term during which you will receive these annuity payments. If you choose a fixed term it cannot exceed 20 years, but you can alternately choose to receiving annuity income for the rest of your life.
At the end of the trust term or upon your death a charitable beneficiary that you choose when you are drawing up the terms of the trust will absorb the funds that remain. The amount that remains in the trust must be at least 10% of monies that have been conveyed into the CRUT.
Further tax benefits include a charitable deduction that is due to the grantor based on a number of different factors, and it is possible to realize some capital gains advantages if you take certain steps after conveying appreciated securities into the charitable remainder unitrust.