Charitable Remainder Unitrust

What is a Charitable Remainder Unitrust?

A charitable remainder unitrust (CRUT) is a giving vehicle that allows a donor to create an income flow (for themselves / others), and make a significant gift to Wheaton College! There are 2 main types of CRUTs with unique benefits: During-Life and Testamentary.

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During-Life CRUT

Want an extra income flow in retirement? Have appreciated assets, but concerned about capital gains tax? Want a charitable income tax deduction? A during-life CRUT may be for you!

You can fund a during-life CRUT with appreciated assets (or cash), and Wheaton College Trust Company can administer it. The CRUT will sell the assets – avoiding immediate capital gains tax – and reinvest in a diversified portfolio. The CRUT pays you income for life. You will get a tax deduction, and Wheaton College (and possibly other charities) receive the remainder!

Charitable Remander Unitrust (CRUT) Diagram showing the flow of investments from donors to the CRUT to Wheaton College and highlighting financial benefits. — The chart above shows how investments such as stock, real estate, and cash can be moved into a CRUT and provide tax deductions and 5% annual payment back to donors. Then upon the death of a second spouse, the donation would go to Wheaton College (or other charities).

Fund a During-Life CRUT with appreciated assets or cash

If using appreciated stock or real estate, there are added benefits:
- Avoiding immediate capital gains tax from a sale
- The remaining gains are spread out over your payments

Testamentary CRUT – the “Give it Twice Trust”

Want to create an income flow for your children in your estate plan (vs. one large lump sum inheritance)? With a testamentary CRUT, you can – and support Wheaton College, too!

A testamentary CRUT is funded through your estate and pays income to beneficiaries for up to 20 years. Payments are based on a fixed percentage of the CRUT’s value (revalued annually).

After, Wheaton (and possibly other charities) receive the remainder!

Testamentary CRUT Diagram shows the flow of investments from donor to a testamentary CRUT with payout for the donor's children and Wheaton College — The testamentary CRUT diagram shows investments flowing from the donor's estate to the testamentary CRUT at the death of the surviving spouse. Over the next 20 years the donor's children will receive a 5% payout. At the end of 20 years, the funds go to Wheaton College.

Fund a testamentary CRUT with retirement assets (IRA, 401k, 403b, etc.), other assets, or cash

If using tax-deferred (traditional) retirement assets, there are added benefits:
- The CRUT pays your beneficiaries for up to 20 years (vs. the 10-year rule for inherited accounts under SECURE Act)
- Assets stay in tax-deferred environment while CRUT makes payments to beneficiaries

Give it Twice Example

Max directs his $500,000 traditional IRA to a testamentary CRUT. At his death, the CRUT pays 5% per year to his daughter ($25,000 in the first year). Assuming neither growth nor decline*, the CRUT pays his daughter a total of $500,000 over 20 years! ($25,000 x 20 years). After, Wheaton receives the remainder – approximately equal to the $500,000 funding amount!