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The Charitable Remainder Unitrust is a special trust that pays income to family members. After all of the income payments have been completed, the remainder is distributed to qualified charities. The person who establishes the trust may select the unitrust percentage, the persons to receive the income from the trust, and the charities which will received the principal of the trust after all income payments are completed. The major benefits of the trust are (1) Bypass of Capital Gains Tax. (2) Increased Income and (3) A Charitable Income Tax Deduction

Bypassing Capital Gains Tax
Investments of property eventually mature. After a very good investment has appreciated, the yield or earnings on that investment may then be quite low. At certain times, it is wise to sell a property and reinvest the proceeds in a new property for maximum investment gain. The unitrust is an ideal method for a tax-free investment, since the qualified unitrust bypasses the capital gains tax. The full amount received from the sale will then be reinvested.

Receiving Increased Income
Mature investment properties frequently are earning two, three or four percent per year. The capital gains tax-free reinvestment through the unitrust might enable a person to sell through a trust without tax an asset earning a low rate of return and reinvest in an asset earning a higher rate of return. The increased earnings can then be passed on to the income recipients using the unitrust income produced by higher yield investments. Over years, family members can reinvest the additional income and acquire even greater economic security.

Receiving an Income Tax Deduction
After the completion of all income payments, the principal or corpus is distributed to charity. Even though charity might not receive anything for many years, the government permits the trust grantor (the person who establishes the irrevocable trust) to take an immediate income tax deduction. The deduction is a percentage of the value of the property transferred to the trust and is calculated using the ages of the donors and the unitrust percentage selected. Many trust donors use their current tax savings for additional investments and thus are able to enjoy the maximum return from their charitable trust payments and also benefit a the same time from substantial income tax savings.