A unitrust is an individually managed trust offering great flexibility and addressing a variety of financial objectives. The trustee will pay the donor and/or other beneficiaries income as a fixed percentage of the value of the unitrust's principal. The unitrust is revalued annually, and income in excess of the percentage payout is reinvested. Thus the value of the unitrust, and future income payments, are projected to grow over time. After the death of the income beneficiaries, or at the conclusion of the term of the unitrust, the remaining balance is applied to the InterVarsity program of the donor's choosing.

InterVarsity can recommend trustees for a unitrust that are financially responsible and share the donor's values. Alternately, the donor may serve as his or her own trustee. Because of the costs of administering a unitrust, InterVarsity suggests a minimum gift of $100,000. Benefits of the unitrust include:

Flexibility: The unitrust may pay income to multiple beneficiaries, for lifetime or for a term of up to 20 years. A unitrust may be structured to accept gifts of assets that are temporarily illiquid - such as real estate or a family business - which should not be donated for a gift annuity or an annuity trust.

Long-term Growth: Unitrusts are not subject to capital gains tax (payments to a beneficiary may be taxable as capital gains depending on the nature of the income distributed). A unitrust may be structured to invest solely for growth for a term of years, and then to convert its appreciated portfolio to higher yielding income instruments - with no capital gains costs. Such a "build-up" unitrust is an attractive way to help provide for future retirement and tuition needs while also making a substantial gift to InterVarsity.

Diversification: The donor gains the security of diversification by contributing individually held assets for conversion into a broader portfolio by the unitrust.

Unitrust One:

• Beneficiaries aged 72 and 70
• 30% income tax bracket
• Holding $100,000 in stock yielding 2%
• Looking for increased retirement income

Example Unitrust One	.
Contribution:	$100,000
Cost Basis	$50,000
Capital Gain:	$50,000 (not reportable)
Income Rate:	5%
First Year's Income:	$5,000 [Future income will vary with trust value]
Increased Annual Income:	($5,000 - $2,000) = $3,000
Charitable Deduction:	$43,523
Tax Savings @ 30%:	$13,057
Capital Gains Tax Avoided:	(20% X $50,000) = $10,000
Total Benefit in First Year:	$26,057 (Tax savings plus increased income)

Unitrust Two:

• Grandchildren will be ready for college in 15 years
• Donors in 30% income tax bracket
• Holding $100,000 in stock yielding 2%
• Want to help with college costs

Example Unitrust Two	.
Contribution:	$100,000
Cost Basis	$50,000
Capital Gain:	$50,000 (not reportable)
Income Rate:	6%, or actual trust income
Investment of Unitrust, Yrs. 1-14	Growth Investments (net 5% growth rate)
Projected Value of Unitrust Principal, Yr. 15:	$208,000
Investment of Unitrust, Years 15 - 20	Income Investments
Income to Grandchildren, Years 15 - 20	$12,500 (annual payout estimate) - Unitrust terminates after 20th year
Charitable Deduction:	$29,880
Tax Savings in First Year @ 30% + Capital Gains Tax Avoided @ 20%	$8,964 + $10,000 = $18,964

InterVarsity Christian Fellowship/USA^® does not offer legal or tax advice for your gift plans, but we do strive to provide helpful educational information and also strive to work carefully with you and your advisors to help you to accomplish your charitable goals.