Charitable Remainder Trust

With a charitable remainder trust, you make a significant gift to Northwestern and receive income payments in return. You can fund a charitable remainder trust with cash, securities, and, in some cases, illiquid assets such as real estate. If you fund the trust with appreciated assets, you may be able to avoid paying income tax on the amount of capital gain that is recognized upon the sale of the assets. When serving as trustee, Northwestern will work with you to establish the trust and oversee its investment and administration.

How It Works

• You transfer a minimum gift of $100,000 in assets to Northwestern. Then the University, as trustee, makes regular payments to you and/or other individuals for your lifetimes and/or a defined period of time, not to exceed 20 years.
• The rate of income paid out to beneficiaries is generally five percent of the principal. A variety of factors, including the number of income beneficiaries and the amount in the trust, will impact the payout amount.
• Upon the death of the surviving beneficiary, the remaining principal in the trust passes to Northwestern. You may choose to support a specific school or program at the University with your gift.
• If you have already established a charitable remainder trust with another organization, you can designate Northwestern as a charitable remainder beneficiary and work with us to ensure your future gift is properly allocated within the University.

Common Types of Remainder Trusts

There are two primary types of charitable remainder trusts: annuity trusts and unitrusts. While each trust offers its own advantages, there are many benefits common to both options, including reduced or eliminated capital gains tax on the sale of appreciated stock and reduced federal income taxes for the charitable remainder value of your gift.

• Annuity Trust: An annuity trust pays a fixed amount, which is determined at the time the trust is established.
• Unitrust: A unitrust pays out a percentage of the trust principal, which is re-valued at the same time each year. In many cases, the unitrust variation provides a hedge against inflation and allows the size of the income payouts to grow over time. The valuation can rise or fall, but over time, a well-managed unitrust may offer better protection of your purchasing power than fixed dollar payments. In addition, if you wish to increase the trust size over time, you can make additional contributions to a unitrust without the cost of creating and administering more than one trust.