Trust Fund

Tax Saving Opportunities

 
A gift in your will to the United Way of Broome County provides continuing support for all the programs of the 32 local United Way agencies and services and a charitable estate tax deduction. A gift to the Trust Fund during your lifetime is even better. It provides double tax benefits—a charitable deduction from both income tax and estate tax. Listed below are some of the many tax saving opportunities available. Please contact Lisa A. Brooks, Director of Finance at United Way of Broome County, for further information on these and other types of tax saving gifts to United Way.

Annuity Trust or Unitrust

Extraordinary tax savings result from establishing an "annuity trust" or "unitrust" during your lifetime, because you keep the income from the trust for yourself or your designated beneficiary and avoid capital gains tax, as well as get the double benefit of income and estate tax deductions.

Many people have securities purchased a long time ago that have a low cost basis. If you are such a person, you may feel locked into your investment because of the high capital gains tax you would have to pay if you sell the securities. A solution to this problem is to establish an "annuity trust" or a "unitrust" with these appreciated securities.

Under either method, you receive an immediate charitable income tax deduction for the actuarial value of your gift. In addition, the trustee of this fund can sell the appreciated securities and reinvest for higher yield. There is absolutely no capital gains tax on the sale of securities by the trustee, because the remainder of the fund goes to charity. The result is that you get lifetime income, no capital gains tax, and a charitable deduction for your gift.

Charitable Lead Trust

A charitable lead trust can also provide great tax savings—in some cases tax deductions equal to or greater than the amount you use to endow the trust. The United Way of Broome County gets income for the period you select, perhaps 5, 10, or 20 years, and you or your designated family members receive the principal of the trust back after that time.

Personal Residence

A gift of a remainder interest in a personal residence or farm produces an immediate income tax deduction, and you and your spouse can continue to live on the property for the rest of your lives. Without giving up anything during your lives, you still get the tax deduction for the future commitment to the United Way of Broome County.

Trust Opportunities

During your lifetime, in a "living" trust, or in your will, you can create trusts that will both benefit United Way and also reduce or eliminate estate and gift taxes payable by you or your estate. Typical kinds of trusts that can be used include Qualified Terminable Interest Property (QTIP) trusts, and trusts designed to take full advantage of the amount exempt from federal and New York estate tax (sometimes referred to as credit shelter trusts). These trusts can be established initially for your spouse, and provide trust income and principal to him or her as needed, and upon his or her death, the remaining balance in trust would be transferred to United Way of Broome County. Careful design of these trusts can result in there being no estate tax on your estate whatsoever.

updated: May 20, 2008