A flip unitrust can be an excellent way for you to give an asset that may take time to sell and receive substantial payments for life once the asset is sold. You might also be interested in using a flip unitrust to make a gift now that will supplement your income in the future, such as when you retire.

A charitable flip unitrust could be right for you if:

  • You want to give an asset that is hard to sell (such as real estate or closely-held stock).
  • You want to supplement your retirement income.
  • You want to save capital gains taxes.
  • You itemize your deductions and want to save income tax.
  • You want to choose the person who administers your gift and guides its investments.
  • You want to make a generous gift to PIH.
  • You are considering a gift amount of $500,000 or more.
 

How Your Gift Helps

Partners In Health works in remote places where health care is limited or barely exists. Your gift will helps us accomplish our collective vision and mission. This includes:

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Every year we provide free, comprehensive medical care to hundreds of thousands of women and children... We hire and train community health workers to help patients overcome obstacles to health care and... We treat patients and run education and prevention campaigns to control cholera, Ebola and HIV/AIDS.

 

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George Hernandez, 58, made a wise $50,000 investment in Berkshire Hathaway stock years ago. It's now worth $1,200,000. He makes the maximum contribution to his 401(K) retirement plan each year and is interested in options for generating additional retirement income. He also would like to make a leadership level gift to PIH.

After consulting with his advisors, George chooses to fund a 5.0% flip unitrust with $1,200,000 in Berkshire Hathaway stock. His unitrust will flip payment methods when he turns 68, the age at which he expects to retire. In the intervening years, his trustee is free to sell the Berkshire Hathaway stock to reinvest in a diversified portfolio without paying any capital gains tax.

Since George doesn't want to receive payments from the trust while he is still working, the trustee can focus on investing for growth and minimizing net income during the trust's pre-flip years. This strategy will allow the trustee to minimize the trust’s payments to George during these years and to maximize them during his retirement years.

Benefits

George will receive an immediate income tax charitable deduction of $402,480. He has enough income to be able to use all of his deduction over his next five tax returns. If he itemizes deductions, the gift will substantially reduce his income taxes during this period. Once George turns 68, he can rely on receiving 5.0% of the value of his flip unitrust each year for the rest of his life.

What’s more, if the income and appreciation of the trust's investments total 7.0% annually and George lives for his life expectancy, over $3,177,033 will be left in his trust to support PIH.

George could not be more pleased with his benefits from his flip unitrust and is thrilled to make a gift to PIH that is substantially larger than he imagined would be possible.

Example

George Hernandez, 58, made a wise $50,000 investment in Berkshire Hathaway stock years ago. It's now worth $1,200,000. He makes the maximum contribution to his 401(K) retirement plan each year and is interested in options for generating additional retirement income. He also would like to make a leadership level gift to PIH.

After consulting with his advisors, George chooses to fund a 5.0% flip unitrust with $1,200,000 in Berkshire Hathaway stock. His unitrust will flip payment methods when he turns 68, the age at which he expects to retire. In the intervening years, his trustee is free to sell the Berkshire Hathaway stock to reinvest in a diversified portfolio without paying any capital gains tax.

Since George doesn't want to receive payments from the trust while he is still working, the trustee can focus on investing for growth and minimizing net income during the trust's pre-flip years. This strategy will allow the trustee to minimize the trust’s payments to George during these years and to maximize them during his retirement years.

 

Benefits

George will receive an immediate income tax deduction of $402,480. He has enough income to be able to use all of his deduction over his next five tax returns, so his gift will substantially reduce his income taxes over the next five years. Once George turns 68, he can rely on receiving 5.0% of the value of his flip unitrust each year for the rest of his life.

If the income and appreciation of the trust's investments total 7.0% annually, he will receive $118,029 in 10 years, and more in the years that follow. What’s more, over $3,177,033 will be left in his trust to support PIH if it terminates in 25 years, which is George's life expectancy.

George could not be more pleased with his benefits from his flip unitrust and is thrilled to make a gift to PIH that is substantially larger than he  imagined would be possible.

 

The gift planning material presented on this website is not offered as legal, tax, or financial advice. 

Prospective supporters are urged to consult with an attorney, financial advisor, estate planner, or accountant before making any arrangements or gifts.