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Ty Smithdeal, Diocesan Planned Giving Officer

Quite a few years ago, John and Mary purchased some stock in a small startup company. Fortunately, the company, which manufactures medical services equipment, has done very well. The stock investment of $40,000 has grown to over $200,000 in value.

John and Mary have heard that a special trust would enable them to bypass the capital gain tax upon sale, receive increased income and benefit from a charitable income tax deduction. They are very pleased with the three benefits. Yet they also have children and would like to provide an inheritance plan for them.

In discussing options with their attorney, she suggests that John and Mary might consider a two-trust plan. The first trust produces all of the tax benefits for John and Mary, while the second trust produces an inheritance and tax benefits for the children.

The first trust is called a unitrust and the second trust is an insurance trust. A portion of the income from the first trust for several years is transferred to the trustee of the second trust. The trustee purchases insurance and this insurance is eventually transferred income tax free and estate tax free to the children. Truly, this plan is a wonderful way of providing retirement income for John and Mary, inheritance for the children, and benefits to their church or charity.

For more information about these or other ways for estate planning, contact the Diocesan Planned Giving Officer or your personal attorney.

© 2001: Chapel of the Cross