Many individuals with modest estates have found trusts advantageous. A unitrust may run for the lives of the beneficiaries or for a shorter number of years, at the donor's choosing. It is paid out quarterly, semi-annually, or annually, again, a donor preference. The rate of return is negotiated figure predetermined between the College and the donor. The lower the payment, the higher the charitable deduction.
Unitrust income is taxed to the donor based upon the trust's investments.
When appreciated stock is used, capital gains tax is completely avoided. It is an excellent hedge against inflation. This is the same type of gift vehicle as the unitrust, with the exception that the income payment is a fixed dollar amount every year as stated in the agreement when the gift is established. Because the income will not vary, the annuity trust is attractive to donors seeking secure and stable income. Also, similar to a unitrust, an annuity trusts payout runs for the lives of the beneficiaries or for a shorter number of years as determined by the donor.