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Good Counsel: The benefits of a charitable remainder unitrust
By Jamie Downes, Associate Director, Office of Planned Giving
Like Kathy Borrero Bloch, JD '81, and Dennis Bloch, many Stanford alumni and friends find that charitable remainder unitrusts offer significant tax advantages. This is especially true for those concerned about capital gains taxes associated with the sale of appreciated securities or real estate.
A charitable remainder unitrust can be established with the irrevocable transfer of cash or appreciated assets. Because the trust is tax exempt, if the trust is funded with appreciated assets, no capital gains taxes are incurred by the trust at the time of the sale of the assets given to the trust. As a result, the full value can be reinvested for diversification, with a variable annual amount paid to the beneficiary(ies) for life and/or for a term up to 20 years. At the end of the trust term, the remaining funds pass to Stanford to support the purpose specified by the donor(s).
By creating a charitable remainder unitrust, the Blochs received a tax benefit at the time of their initial gift in the form of a charitable income tax deduction. Each time they made an additional gift to their trust, they received another tax deduction equal to a portion of the amount gifted to the trust.
When the trust term ends, the remainder in the charitable remainder unitrust is transferred to Stanford to support the purpose designated by the donors. In the case of the Blochs, the couple has chosen to support Stanford Law School.
Benefits of creating a charitable remainder unitrust:
- Variable annual income that is based on a percentage of the fair market value of the trust assets, revalued each year
- Federal, and possible state, income tax charitable deduction
- No capital gains taxes paid by the trustee at the time of the sale of appreciated assets transferred to the trust
- Diversified investments
- A gift for Stanford's future
Stanford’s charitable trust program is one of the largest among U.S. colleges and universities. Our knowledgeable staff would be happy to help you learn more about a charitable remainder unitrust or one of Stanford's other life income gifts.