Sale and Unitrust

Are your appreciated assets, such as stock, bonds or real estate, producing little or no income?

If you sell your appreciated assets, you will pay a large capital gains tax. A sale and charitable remainder unitrust may be the solution to avoid capital gains tax.

Sale and Unitrust

Property

Cash To Donor From Sale

Income to Donor

Unitrust

Benefits of a sale and unitrust

Receive cash from the sale. You can use this cash to purchase another residence, to save for retirement, to travel, to meet your daily needs or to meet some other financial goal
Receive income from the unitrust for the rest of your life and future retirement
Obtain an income tax deduction that may reduce your tax bill this year
Further the work of Susquehanna University with your gift

How a sale and unitrust works

You establish a charitable remainder unitrust and transfer a portion of your assets to the trust.
The assets are then sold. You receive cash from the sale, and the rest of the sale's proceeds are paid to the charitable unitrust.
The trust will provide you with income for the rest of your life.
You receive a charitable deduction this year to offset your tax on the cash proceeds that you receive from the sale.

More on sale and unitrust

When transferring a portion of your primary residence to fund a unitrust, you may apply your one-time home exclusion to reduce or eliminate capital gains tax that would otherwise be due from the sale. Your tax advisor can assist you to determine if you should utilize this strategy.

Sample Sale and Unitrust Scenario

Alex and Casey purchased stock in a small medical service company several years ago. The company has done well. A larger company is now discussing the possibility of buying the smaller company. This sale would require that Alex and Casey sell their stock, subjecting them to capital gains. Alex and Casey are looking for a way to save taxes.

Alex: We were fortunate to invest in the medical services company. The services this company provides have become more and more important, especially for senior Americans. We thought the value of this stock would grow, and it did. We originally paid $50,000 for the stock, and it had grown to $400,000 in value.

Casey: We talked about selling the stock, but that would have required us to pay a large tax bill. We had hoped to sell the stock to buy a vacation home. We had found a very nice summer cottage for sale on a nearby lake. The price was approximately $120,000.

Alex: We checked with our CPA; he suggested that we talk to a gift planner at our favorite charity. The gift planner told us about a sale and unitrust. We were happy to discover that with a sale and unitrust we could transfer $280,000 worth of the stock into a special trust called a charitable remainder unitrust. The unitrust could then sell the stock tax free.

Casey: Best of all, we were able to sell the rest of the stock for $120,000 cash. The deduction from the gift transferred to the trust saved enough in taxes to offset the capital gains tax on the $120,000 that we received from the stock sale. As a result, we could use the full $120,000 to purchase the lake home.

Alex: This was a wonderful arrangement. We now have income and are enjoying our dream house on the lake.

Is a sale and unitrust right for you?

If you own highly appreciated property, such as real estate or stocks, you could benefit from a sale and unitrust. The trust will help you bypass capital gains, will provide you with a charitable income tax deduction in the year of the gift and could increase your income. The sale part of this transaction could provide you with a one-time lump sum payment.

*Please note: The names and image above are representative of a typical donor and may or may not be an actual donor to our organization. Since your unitrust benefits may be different, you may want to click here to view a color example of your benefits.

Contact us

If you have any questions about a sale and unitrust, please contact us. We would be happy to assist you and answer any questions you might have.