Frank and Evelyn Rice discovered a unique and creative way to generate supplemental retirement income while making a significant gift to Union College . Frank (’39) and Evelyn ’41, were the owners and managers of Rice Equipment Company, a dealer in forklift sales and service based in St. Louis, Mo. With retirement nearing, they evaluated the best way to put their ownership of Rice Equipment Company to work for them.
After considering the options, they decided to create a charitable remainder unitrust with Union College, funded with shares of Rice Equipment Company stock. Union College, as trustee, then offered the shares for sale back to Rice Equipment Company. The company purchased the stock using retained earnings (which would normally be heavily taxed if distributed to the shareholders).
The cash in the unitrust was then invested for the long term and the Rices began receiving a quarterly distribution for the remainder of their lives. Every year the trust is revalued and a new quarterly distribution is calculated. As the value of the unitrust assets grows, so does the Rices’ quarterly payments. Frank is quick to state, “It brings Evelyn and me great satisfaction to know we’ve made a significant gift to Union College while also creating a guaranteed lifetime income during our retirement.”
Their charitable remainder unitrust enabled the Rices to convert highly appreciated, low-yield securities into increased disposable income. Additional benefits include:
- A sizable income tax charitable deduction
- Avoidance of all capital gains tax
- Professional management of the trust assets
- Assets given to a charitable remainder unitrust will not be included in the donors estate for computing estate tax
A charitable remainder unitrust is an excellent method for devising a supplemental retirement plan.
To find out more about establishing a unitrust, see our giving opportunities.