CRUTs: A practical path to a lasting legacy


Russ Speidel, Attorney, Speidel Bentsen Law Firm

 Today we’d like to introduce you to the Charitable Remainder Unitrust, also known as the CRUT. CRUTs can be a donor’s best friend, providing them an income stream for life and allowing them to establish a legacy once they pass.  In 1995, an investment advisor called me for help. He had an elderly retiree-client, a single man who owned about $1 million of appreciated Alcoa stock. The advisor was looking for a way to sell the stock, to avoid paying capital gains tax, AND increase his client’s monthly income. This was a tall order, but when I inquired and learned that the retiree might have a charitable intent, there was an easy solution: form a Charitable Remainder Unitrust with the Community Foundation. It worked marvelously. The retiree transferred his Alcoa stock to the Community Foundation, which could sell it tax free. Then, during the remainder of the retiree’s lifetime, the CRUT paid to the retiree all of its net income, a sum much greater than the Alcoa dividends. The retiree, Roy Hill, established a lasting legacy through a Scholarship Fund and a Designated Fund. To this day, those funds support students and provide income to his favorite charity every year. In the 20 years since he passed in 1998, approximately $1.3 million has been awarded in grants and scholarships and the funds have grown in value with a balance today of over $1.9 million – allowing his legacy to continue on, forever. Roy Hill loved music. He cared deeply about ensuring the future of aspiring musicians and also supporting the Wenatchee Valley Symphony, one of his favorite non-profits.By establishing a CRUT, Mr. Hill secured a larger income for himself during the remainder of his life, and he left an astonishing gift to the community by creating the Roy W Hill Music Scholarship and a designated fund to benefit the symphony. CRUTs work particularly well when people have an appreciated asset and want to avoid capital gains tax. People who own rental properties – and are tired of being landlords – can gift their rental properties to CFNCW to establish a CRUT. Often the interest income from the CRUT provides as much if not more income than they would have received from tenants, without all the hassle of maintaining the property. CRUTs provide tax advantages and provide a charitable deduction for the donor. And the best part: They will have established a charitable legacy in the process.
To learn more, visit www.cfncw.org or contact the Community Foundation at (509) 663-7716.
 

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