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Gift Planning

Charitable Remainder Unitrusts--Charlotte Lutton

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Charlotte Lutton

Charlotte Lutton persevered through a tragic loss that had a profound impact on both her personal and professional life.

Soon after Charlotte married Clyde Lutton '66 they founded The Events Organization, an event planning and corporate communications business. "When Clyde and I started the business—and this carried through to most areas of our life—we each focused on our strengths. I handled the front-end of the business. Clyde handled more of the operational aspects, including finance, which he had a gift for. Generally speaking, I brought the money in and Clyde made the money work," says Charlotte. With determination and dedication, they devoted all their time, energy, and money to their business. Since time and financial resources were limited by the demands of operating and growing their business, hobbies such as golf for Clyde and riding for Charlotte were soon abandoned.

When Clyde died in 1999, Charlotte lost more than a loving husband; she lost her business partner and financial administrator. Charlotte, like so many other women who lose their spouses, found herself faced with many decisions and alone. "In keeping with our pattern of focusing on our strengths, Clyde generally took care of the finances. I rarely dealt with them," says Charlotte. She explained, "I got married two months out of college and always put my earnings into our joint funds. These were usually managed by Clyde."

"Only in the last week of Clyde's life did he walk me through the accounts he maintained for us. It was so much to absorb at a time when his health and comfort were my focus. I wasn't even sure of the ATM password, since my 'walking around money' usually came out of his wallet."

While coping with her loss, Charlotte still had a business to run, and she knew she needed to assemble a team to assist with the financial administration of her private and professional affairs. "I had to find resources to fill many of the roles Clyde previously fulfilled in our life together. That included hiring a CPA and an estate attorney, as well as beginning to work much more closely with our investment advisors."

Rosalia "Rodi" B. Strauss, certified public accountant with Strauss & Suit, P.A., has been Charlotte's advisory partner for the past eight years. "When it comes to financial matters, it's important to have an advocate, someone who has a sense of who you are, and for me Rodi is just that person. I appreciate her financial acuity, her ability to explain financial matters in real terms, and she never speaks 'down' to me."

Rodi said that "Charlotte's situation is very common. Since women tend to outlive men, they, like Charlotte, are left with sole control of the marital assets. In many cases a surviving spouse has limited financial experience. It is important for women to educate themselves about basic money management concepts such as life insurance, mutual funds, stocks, bonds, and wills so they can make informed financial decisions that will ultimately help them." Rodi shared that "Charlotte has truly come a long way when it comes to financial matters. She [Charlotte] took the time to educate herself in those areas previously handled by Clyde."

Charlotte has a long-standing relationship with the College and has made many lifelong friends through Haverford. "I know Clyde wanted to be able to do something significant for Haverford. Because of his interest, as well as my own, I have committed to supporting the mission of the College." This she has done by working as a '66 class chair for annual giving, by bringing creativity to reunion planning, and by founding the E. Clyde Lutton '66 Memorial Fund in support of student-produced performing arts productions. Now, Charlotte has decided to fund a charitable remainder unitrust (CRUT) at the College.

Rodi explained that "a CRUT, or unitrust, is an ideal way to provide income to a surviving spouse and children with the ultimate beneficiary being the charity or Haverford College. CRUT's are wonderful gift vehicles because they do not exclude heirs. By establishing an irrevocable trust, Charlotte is comforted, knowing that her assets will be distributed the way she intended. The trust will provide Charlotte with a current income stream for a certain period of time, after which the remaining money in the trust will go to the College. It's a win-win situation all around."

Charlotte summed it up best: "I know I can't take my money with me when the time comes. Clyde and I have no immediate heirs, so creating this unitrust perpetuates all we loved about Haverford."

Rodi points out that "before making a gift to Haverford or any charity, people must look at thei current income needs, the needs of beneficiaries, provisions for surviving beneficiaries, and the remainderman [charity]. Donors should also look at the double tax benefits; by funding a CRUT with appreciated securities the donor never pays capital-gain tax and the donor gets a charitable tax deduction. Trusts can be established with as little as $100,000, which puts them well within the range of a large portion of alumni. Since charities have departments devoted to planned giving it makes the whole process of making a deferred gift, such as a CRUT, easier. People need to feel good about their gifts, and educational institutions, such as Haverford, are ideal because they are investing in future leaders."

Now that Charlotte has overcome the financial hurdles through careful estate planning she is able to take up her long-forsaken equestrian hobby and enjoy riding once again.

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Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. California residents: Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. Oklahoma residents: A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. South Dakota residents: Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.

A charitable bequest is one or two sentences in your will or living trust that leave to Haverford College a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I give to Haverford College, a nonprofit corporation currently located at 370 Lancaster Avenue, Haverford, PA 19041, or its successor thereto, ______________ [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to Haverford or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate, or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property, or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to Haverford as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to Haverford as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and Haverford where you agree to make a gift to Haverford and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.
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