Planned Giving: Charitable Remainder Trusts

Charitable Remainder Trusts provide a charitable deduction and an income for life or a fixed term of years.  At the end of the payout period, the trust principal passses to the charity.  You select the payout rate (usually between 5 and 8%).  The higher the payout rate, the lower the charitable deduction.  There are two types of Charitable Remainder Trusts -- the annuity trust and the unitrust.

The annuity trust payout is a fixed dollar amount regardless of the performance of the trust assets.  This amount is determined at the time of the gift and no additional contributions may be made to the trust.

With a unitrust, the payout rate is a percentage of the fair market value of the trust assets, and it is determined at the time of the gift.  These assets are re-valued annually, providing the donor with a variable income and a good hedge against inflation.  The donor may make additional contributions to the unitrust.

Both types of trusts provide a charitable deduction, income tax and capital gains savings, and a possible reduction in probate costs and estate taxes.  A testamentary unitrust (established by a will), can result in significant estate tax savings as well as providing income for a beneficiary.

If you establish a planned gift to benefit Andover Newton, you will be invited to become a member of our Heritage Society. An Honor Roll of Heritage Society Members is published in our Annual Report. You can choose whether or not you want your name to appear on the Honor Roll. There is also an annual reception for Heritage Society Members in the fall.

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