Charitable remainder trusts
A charitable remainder trust is a powerful tool for (1) providing funds
for you and your loved ones, and (2) making a generous gift to MIT. It
allows you to transfer assets into a separately managed trust that will
provide you and/or your beneficiaries with payments for life or for a
specific term of years.
MIT currently serves as trustee of many charitable remainder trusts,
making scheduled payments to the beneficiaries, and preparing tax statements
for both the IRS and those beneficiaries.
There are two types of charitable remainder trusts:
Charitable remainder unitrusts
A unitrust pays a percentage of the fair market value of the trust,
valued annually, to a maximum of two beneficiaries age 55 or older. Unitrusts start at $100,000, and additions may be made subsequently.
Unitrusts can be funded with cash, securities, real estate, or personal
property.
One of the advantages of the unitrust is that income from the trust
can increase as the trust principal grows over time. Distribution to
the beneficiaries of an MIT unitrust is generally established at five
percent of the annual fair market value of the trust. You are subject
to income tax on your receipt of that payment, depending on the type
of income earned by the trust.
Charitable remainder annuity trusts
An annuity trust provides a fixed income based on a percentage of the
initial fair market value of the property on the date of the gift, to
a maximum of two beneficiaries age 55 or older. Annuity trusts also start at $100,000. Additional contributions cannot be made
to the trust. The annuity trust can be funded with cash or securities.
To request a personalized proposal, please use our electronic
form and
provide us with some basic information.
Or, feel free to contact MIT’s Office
of Gift Planning at
gift_planning@mit.edu or 617.253.6463
with your questions.
Case study: Establishing a charitable remainder unitrust
Robert Smith, 76, was a scholarship recipient at MIT in the early 1950s,
and later enjoyed a successful career managing an engineering firm. Smith
has always planned to repay the Institute for the generous support that
allowed him to attend MIT. He and his wife Lucy, 68, own stock now valued
at $100,000 that they bought several years ago for $10,000. The stock
pays an annual dividend of $1,200. They have been reluctant to sell the
stock and reinvest the proceeds for greater income because they would
be required to pay a capital gains tax. Instead, they decide to establish
a five percent MIT charitable remainder unitrust.
This decision allows them to—
- receive an income tax deduction of $42,970;
- increase their first-year income to $5,000;
- make a philanthropic contribution to support undergraduate
students in the electrical engineering and computer science department; and
- avoid paying capital gains tax on their gift.
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