Net Income with Makeup Charitable Remainder Unitrust
These charitable remainder trusts can be designed for families with philanthropic intentions and a desire to defer current income taxation. From an income tax standpoint, these trusts can be used to defer tax in a variety of situations – perhaps the trustmaker has plans to sell his or her business and would like to defer taxes on the sale, perhaps he or she has a significant position in low basis stock or real estate to sell and diversify, or perhaps he or she has a significant amount of passive income not fully needed for consumption and living expenses (e.g. rental income, royalty income, portfolio income). At First Covenant Trust, we can work alongside your attorney to draw up documents, then serve as your professional trustee to help navigate income needs, cash flow planning, investment decisions and tax implications throughout the life of the trust. These trusts are typically set up as 20-year vehicles, though they can be set up as lifetime vehicles. At the termination of each trust, the charity(ies) of the trustmaker’s choosing inherits the remainder value of the trust after the family has received its payments. Our fees for this service are assessed and billed quarterly as a small percentage of the trust’s assets.