If your estate is valued in excess of the estate tax exclusion amount, you are going to have to consider ways to reduce the taxable value of your estate. At the present time this figure is $5.12 million, but it is scheduled to be reduced to just $1 million at the end of the year.
Many people who must seek estate tax efficiency are also interested in contributing to charitable causes. One way to achieve both aims would be to create a charitable remainder unitrust.
With these trusts you name a non-charitable beneficiary who will receive annuity payments from the trust annually. These payments must equal between 5% to 10% of the annual valuation of the trust. In the majority of cases the grantor of the trust will act as the non-charitable beneficiary.
When you are creating the trust you also decide on a charitable beneficiary. This charity will assume ownership of the remainder that exists in the trust after its term has expired. (You decide on the length of this term when you create the trust). The remainder amount must equal at least 10% of the overall value of the trust.
Creating the trust shifts the assets used to fund the vehicle out of your estate for estate tax purposes. Capital gains responsibility could be spread out during the trust term, and there is a charitable deduction to be had as well.
If the possible creation of a charitable remainder unitrust interests you, reach out to discuss the details with a licensed and experienced Somerset County estate planning lawyer.