PG Calc Blog

Ready or not, it’s year-end again, which leads us right into tax season – that “most wonderful time of the year!” Here is our quick review of the tax reporting process for life income gifts.

It is not unusual that a charitable remainder unitrust (CRUT) or pooled income fund (PIF) gift made by a donor years ago no longer meets the donor’s or charity’s financial objectives. A trust donor may fear that a stock market correction will deflate trust assets and her income. Or a trust with a high payout rate may be headed toward trust assets exhausting. A charity’s pooled income fund may have only a few remaining participants and the charity desires to terminate the fund because of excessive fees.

We may be at the break of a new dawn for charitable remainder unitrusts (CRUTs). CRUTs exploded in popularity in the 1990s, driven in part by financial advisors who recommended CRUTs as a way to shelter donors from significant capital gains tax while enhancing cash flow and supporting their favorite charity. Then capital gains tax rates dropped, the stock market went south, and CRUT activity soon slowed. Now, stronger incentives for high income donors to contribute appreciated assets to fund a CRUT are back.