A testamentary charitable remainder unitrust, also known as a “give it twice” trust, is a qualified charitable remainder unitrust (CRUT) that is only created after the donor’s lifetime. Provisions for such a CRUT are embedded in the donor’s will(s) or revocable living trust.
When funded with retirement accounts and other tax-deferred assets after the accountholder’s lives, they provide very significant benefits both to family and charity. Family members are selected to receive payments for a term of years or their lives. After the CRUT ends, one or more charities receive the trust remainder, usually into endowments specified by the donors who created the CRUT.
My wife, Wanda, and I included detailed provisions in our wills for a “give it twice” trust to be created after our lives, which will receive all our tax-deferred retirement assets. Our family members will then receive significant benefits in the form of annual payments, while also providing gifts to Texas A&M and our other selected charities at the end of the trust.
If we give our children our IRAs, retirement accounts and tax-deferred assets after our lifetimes, they will also inherit our unpaid income tax burden on all the tax-deferred ordinary income. And now, under the SECURE Act, they would have to withdraw it all within 10 years and pay the associated tax. Basically, the equation would be about 60% to family, 40% to tax, and nothing to Texas A&M or other charities.
With the “give it twice” trust, the entirety of our retirement accounts will flow into the charitable trust after our lives. If done properly, with the able assistance of your advisors, all tax is eliminated on the tax-deferred ordinary income in the IRA as the former IRA funds are transferred into the trust. The trust then pays out to the recipients on the whole amount at the selected unitrust payout percentage. So, if the terms of the charitable trust require a payout of 5% during a 20-year period, then our children would receive 5% of the value of the assets in the trust every year as an inheritance by way of trust, payable over that 20-year timeframe. If the trust grows at 7%, then the total payout to family will be even greater, because the 5% would be calculated to include the 7% growth in that year. When the trust ends, its assets flow into endowments for charitable gifts Wanda and I selected. Hence the name: Give it twice.
From our Aggie attorney, Amy Bloomquist ’83, who skillfully guided us and inserted the provisions for the “give it twice” trust in our wills, to our very knowledgeable Aggie CPA and investment advisors, our plan is covered in maroon!
Observing other donors who have developed this plan for themselves, their families and Texas A&M was also immensely helpful. They showed us the way, and we are very thankful.
“Give it twice” trusts funded with retirement account assets have been very popular with the Foundation’s planned giving donors for many years. With the passage of the SECURE Act, we believe that many more people will utilize the plan for the benefit of their families and Texas A&M. These plans are very beneficial for both the family and Texas A&M and perhaps other charities the donors may wish to support. I encourage Aggies and friends of the Foundation to learn more about this opportunity. The Foundation’s gift planning team has a wealth of knowledge and experience to help clients and their advisors meet goals that best fit their individual priorities and plans.
