Charitable Remainder Annuity Trust | Charitable Remainder Unitrust | Charitable Lead Trust

Through a charitable remainder trust, you can enhance the programs and facilities at Humboldt State University while you and/or your loved ones receive income from the trust. You can choose to have the charitable remainder trust begin during your lifetime or include it in your will.

Charitable Remainder Annuity Trust

To establish an annuity trust, you irrevocably transfer certain assets such as cash, securities, or bonds to the Humboldt State University Foundation to be held in trust. You and your designated beneficiary or beneficiaries receive a fixed payout of 5 percent or more of the initial fair market value of the transferred property.

Example: Robert, age 63, wants to arrange a charitable remainder annuity trust in the Humboldt State University Foundation with $100,000 in appreciated securities for which he paid $65,000. He decides to receive $5,000 annually (5 percent) from the annuity trust for his life and for the life of his wife, Dorothy, age 61. Assuming the trust earns a 5 percent return, Robert does not have to pay capital gains tax on the $35,000 of appreciation and receives a charitable income tax deduction. In addition, he and his wife receive a fixed annual payment of $5,000. This lifetime gift will help fund a scientific laboratory at Humboldt State.

Charitable Remainder Unitrust

To establish a unitrust, you irrevocably transfer property or cash (as with the annuity trust) to the Humboldt State University Foundation which serves as trustee. You and your designated beneficiary or beneficiaries receive an annual payment of at least 5 percent of the trust's current fair market value.

Example: Recently retired, Susan is 65 years old. She decides to establish a charitable remainder unitrust in the Humboldt State University Foundation with real estate she owns that is valued at $200,000 and was purchased for $70,000. With the unitrust she establishes, Susan receives a first year annual unitrust payment of 5 percent of the value of the trust assets -- in this case $10,000. Susan also likely eliminates capital gains tax and receives a charitable income tax deduction.

The annual payment is determined each year based on the market value of the trust assets. This charitable gift will allow Susan to create an endowed faculty development fund in one of Humboldt State's colleges or departments.

Charitable Lead Trust

With a charitable lead trust, you place certain property (securities, bonds, real estate) in trust by gift or bequest. The trust provides a fixed annual sum to the Humboldt State University Foundation for a set period of time. At the end of that period, the full ownership of the property and all income from it is returned to you or your beneficiary. You can use this trust to pass assets to beneficiaries with substantially reduced taxes. You receive an income tax charitable deduction or a charitable gift or estate tax deduction, depending on the type (grantor or non-grantor) of trust agreement.

Example: Guy, age 58, has a high taxable income. He establishes a charitable lead trust of $500,000 in assets with the Humboldt State University Foundation. The non-grantor lead trust will pay a fixed sum to the Foundation for 12 years and then the trust principal will be distributed evenly to Guy's two children. With the annual income it receives, the Foundation will establish a fund for the Humboldt State academic program that fits Guy's interests.

Guy does not claim an income tax deduction for the present value of the Foundation's income interest. Guy also does not include the income in his personal income. However, the value of this type of trust is Guy's ability to transfer the assets to his children with potentially reduced gift or estate tax when the trust terminates.

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