The Retirement Unitrust

• Mary: "We received modest payments from the farm over the years, including from a neighboring farmer who rented our land for grazing. Since I inherited the farm from my parents several years ago, the value has greatly increased."
• Bill: "Since it is a good time to sell, that's what we would like to do. We would also like to invest the sale's proceeds for growth for about 10 years until we retire. However, when we checked with our tax advisor, she told us that if we sold the farm, we would have a large capital gains tax bill."
• Mary: "But then she told us about a plan that would provide for our retirement. She explained that we could transfer the land into a special retirement trust. Once inside this trust, the farm could be sold tax free and the cash invested for growth. The proceeds would grow tax free inside the trust until we retire. By the time we retire, the payouts would be taxable, but we could have as much as $900,000 in the trust."

Bill and Mary's advisor discussed a charitable remainder unitrust, or retirement unitrust. The retirement unitrust pays out either a fixed percentage of the trust assets each year or the trust income, whichever is lower. Because the trust is invested for growth instead of income, the payments from the trust will remain low while Bill and Mary are still working. This strategy allows the trust to grow in value so that the unitrust can provide greater income to Bill and Mary in retirement.

• Bill: "We took her advice and transferred the farm to the unitrust. We know we will enjoy a very nice retirement. We already have an IRA and are planning to use that for retirement. With the extra income from this retirement trust, we will be able to travel and really enjoy our golden years."

What is a charitable retirement unitrust?

A charitable remainder unitrust is a trust that can be funded with your cash or other assets that provides you with income and tax benefits and supports the work of Santa Barbara Museum of Natural History with the remainder.

Charitable remainder unitrust video

Is a retirement unitrust right for you?

If you have a highly appreciated asset, such as real estate or stock, and are several years away from retirement, a retirement unitrust could help you sell the asset tax-free while saving for retirement. Please contact us if you have questions about a retirement unitrust.

Please note: The information above is representative of a typical donor and may or may not be an actual donor to our organization. Since your unitrust benefits may be different, you may want to create a printable illustration of your benefits by using the calculator on this page.