The donor is allowed to claim a tax deduction for the estimated portion of the assets that will ultimately come to Duke. When the donor dies, Duke keeps all remaining assets. The two types of remainder trusts are Unitrusts and Annuity Trusts. Under a basic Unitrust, the donor receives one or more yearly payments equaling a fixed percentage of the value of the asset, which is assessed each year. Under a net-income unitrust, the donor receives only the income earned by the trust, even if the trust earns less than the payout rate.
Many donors find the trusts an appealing way to prepare for retirement.
The assets can be invested to earn a lower rate of return when the donor is younger and then shifted to earn a higher rate of return, and thus provide more income during the donor s later years.