Charitable remainder unitrust example

Tom and Barbara own a lot on the coast that they have owned for many years. For many summers they would camp on the lot with their family. They have decided to do something with the property that would provide more income to them. They are 65 years old and recently retired.

The lot was purchased 20 years ago for $30,000 but is now worth $220,000.

They are considering a 6% unitrust to increase the potential of an increasing income stream over time and an increasing retirement income for them.

Fair Market Value $220,000
Basis $ 30,000
Debt $ 0
Capital gain $190,000
Capital gains tax rate 15% Federal + 9% Oregon = 23%

Potential capital gains tax (if property sold) $ 43,700

Value of asset to trust $220,000
Type of instrument FLIP Standard Unitrust
Term of instrument Donors' Lives
Rate of return 6.0%
Tax deduction $ 63,171

Projected income
Year 5 $ 13,693
Year 10 $ 14,343
Year 15 $ 15,033
Year 20 $ 15,764
Year 25 $ 16,541

Anticipated total return over trust term $369,866

Amounts include benefit from growth of trust principal. Trust may continue beyond 25 years since the term is the donors' lives.

This information is provided for the planning purposes of the donor. It is recommended that the donor review all such information with his/her legal and financial advisors.