A flip unitrust can be an excellent way for you to give an asset that may take time to sell and receive substantial payments for life once the asset is sold. You might also be interested in using a flip unitrust to make a gift now that will supplement your income in the future, such as when you retire.

A charitable flip unitrust could be right for you if:

  • You want to give an asset that is hard to sell (such as real estate or closely-held stock).
  • You want to supplement your retirement income.
  • You want to save capital gains taxes.
  • You itemize your deductions and want to save income tax.
  • You want to choose the person who administers your gift and guides its investments.
  • You want to make a generous gift to Sigma Chi Foundation.
  • You are considering a gift amount of $250,000 or more.
 

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Separate trust
A charitable remainder unitrust with a flip provision, or "flip unitrust," is a tax-exempt trust governed by a trust agreement. You choose the trustee who is responsible for administering your flip unitrust and guiding the investment of its assets.

Irrevocable gift 
A flip unitrust is an irrevocable arrangement. Once you transfer assets to create the trust, you cannot change your mind and get the assets back. This requirement assures that whatever value remains in your flip unitrust when it ends will go to support Sigma Chi Foundation.

Payments made for duration of trust
A flip unitrust will make payments to individuals, such as you, or you and your spouse, for as long as the trust lasts. The amount of its payments will depend on several factors, including whether or not the trust has "flipped" how it determines payment amounts.

Remaining assets to Sigma Chi Foundation
When your flip unitrust ends, all of its remaining principal will become available to support Sigma Chi Foundation.

Determination of payment amount before and after "flip"
Initially, a flip unitrust makes payments each year equal to a percentage of its value, as revalued annually, or its net income, whichever is less. If the flip unitrust earns no net income during this period, for example, it makes no payments. After the unitrust "flips," it makes payments equal to a percentage of its value, as revalued annually, regardless of its net income. If it earns 3% net income one year during this period, for example, but has a stated payment percentage of 5%, it will pay 5% of its value from income and realized capital gain for the year.

Designated event causes flip
You designate the event that will cause your flip unitrust to change how it determines payment amounts. The event must be an occurrence that is not within the control of you, the beneficiary, the trustee, or any other person. Popular flip triggering events include a specific date, such as the date you plan to retire, and the sale of an “unmarketable” asset with which the unitrust was funded, such as real estate or a block of closely-held stock. The change in payment method takes effect on January 1 of the year following the triggering event.  

You choose the payment %
You choose the percentage of your charitable trust’s value, as revalued annually, that it must distribute to its income beneficiaries each year, once it flips payment methods. This payment percentage must be at least 5%. It may be to your advantage to choose a relatively low payment percentage so that your charitable trust’s assets have the best chance to grow. If the value of your unitrust grows, so will its payments. A payment rate of 5% to 6% is typical. Payments are usually made in annual, semiannual, or quarterly installments. 

Who can receive payments?
You decide who will get the payments from your flip unitrust.  Usually, this will be you, or you and your spouse. You can, however, select other people to receive the payments. For example, you may wish to provide income for parents, a sibling, or children.

How long do payments last?
While most flip unitrusts last for the lives of one or two payment recipients, other terms are possible. A unitrust can last for more than two lives, for a specific length of time of up to 20 years, or for a combination of lives and a fixed term years.

Tax benefits

  • Enjoy immediate tax savings from an income tax charitable deduction, if you itemize.
  • Avoid capital gains tax.
  • May reduce estate taxes if your estate exceeds the then applicable estate tax credit.
  • You may reduce probate costs.

You will receive an income tax charitable deduction in the year of your gift. If you cannot use the entire deduction that year, you may carry forward your unused deduction for up to five additional years.      

If you give appreciated assets to fund your flip unitrust, you will not pay any capital gains tax when you make your gift. In addition, because a flip unitrust is a tax-exempt trust, it will not pay any capital gains tax when it sells these assets. This means that your trustee will be able to reinvest the full value of the assets you donate. By removing the gift assets from your estate, you may also reduce estate taxes if your estate exceeds the then applicable estate tax credit. You may also reduce probate costs when your estate is settled.

Taxation of payments
The taxation of flip unitrust payments depends on the trust’s past distributions and investment performance. Payments from a unitrust are typically taxed as ordinary income. If the trust is funded with appreciated assets, a portion of the payments could be taxed at lower capital gains tax rates in some years. It is even possible for a portion of the payments to be tax-free in years when there is not enough ordinary income and capital gain income to make the payments.

Add funds anytime
You can add to your flip unitrust anytime. Additions to your unitrust will generate an additional income tax charitable deduction that could save you income taxes if you itemize. You will also increase your future payments without the hassle or expense of creating and administering a new flip unitrust.

Assets to consider giving
The following assets make excellent sources for funding your flip unitrust:

  • Cash that you currently have in a savings account, bank CD, money-market fund, or other safe but low-yielding investment.
  • Securities, especially highly-appreciated securities.
  • Real estate that is debt-free, closely-held stock, and other assets that may take time to sell.

Flip unitrust as retirement supplement
A flip unitrust can work nicely as a supplemental retirement plan that also supports Sigma Chi Foundation. The trustee of your flip unitrust can focus on asset growth during its pre-flip years, causing the unitrust to make little or no payments to you during its early years when you don't need the income. If you set up your unitrust to flip payment methods in the year you expect to retire, then it will make payments to you equal to its full percentage amount, such as 5% or 6% of its value, starting when you need the income.

Flip unitrust as way to increase income from asset that may take time to sell
A flip unitrust also can work nicely as a way to make a gift of an asset that may take time to sell, such as real estate or closely-held stock, and increase your income at low tax-cost. During your unitrust's pre-flip period, the trustee can focus on selling your asset at a fair price without worrying about making payments to you when there isn't enough income available to make them. The sale of your asset can trigger your unitrust to flip payment methods so that from then on your unitrust will pay you its full percentage amount, such as 5% or 6% of its value, every year. Since your flip unitrust is tax-exempt, your trustee will be able to reinvest all of the proceeds from the sale of your asset.

Example

George Hernandez, 58, made a wise $50,000 investment in Berkshire Hathaway stock years ago. It's now worth $1,200,000. He makes the maximum contribution to his 401(K) retirement plan each year and is interested in options for generating additional retirement income. He also would like to make a leadership level gift to Sigma Chi Foundation.

After consulting with his advisors, George chooses to fund a 5.0% flip unitrust with $1,200,000 in Berkshire Hathaway stock. His unitrust will flip payment methods when he turns 68, the age at which he expects to retire. In the intervening years, his trustee is free to sell the Berkshire Hathaway stock to reinvest in a diversified portfolio without paying any capital gains tax.

Since George doesn't want to receive payments from the trust while he is still working, the trustee can focus on investing for growth and minimizing net income during the trust's pre-flip years. This strategy will allow the trustee to minimize the trust’s payments to George during these years and to maximize them during his retirement years.

Benefits

George will receive an immediate income tax charitable deduction of $422,160. He has enough income to be able to use all of his deduction over his next five tax returns. If he itemizes deductions, the gift will substantially reduce his income taxes during this period. Once George turns 68, he can rely on receiving 5.0% of the value of his flip unitrust each year for the rest of his life.

What’s more, if the income and appreciation of the trust's investments total 7.0% annually and George lives for his life expectancy, over $3,177,033 will be left in his trust to support Sigma Chi Foundation.

George could not be more pleased with his benefits from his flip unitrust and is thrilled to make a gift to Sigma Chi Foundation that is substantially larger than he imagined would be possible.

Donors-Scholars Initiative

Each year, your generous donations make it possible for the Sigma Chi Foundation to grant numerous academic scholarships and awards to our deserving undergraduate and graduate brothers. Providing scholarships and academic awards furthers the Foundation’s goal to promote academic excellence. We proudly award brothers who show outstanding leadership, academic motivation and commitment to their chapters and campuses. The Sigma Chi Foundation will provide $505,000 in academic scholarships to undergraduate and graduate students over the 2018-19 academic year. This year, your gifts impacted individuals from 169 different Sigma Chi chapters. This includes an 12th-consecutive annual increase of $25,000 or more in awards.

The Sigma Chi Foundation’s Donor-Scholar Initiative provides a naming opportunity to interested alumni who wish to directly support the Foundation’s expanding scholarship program. Donors contributing to this effort at an endowment level (a one-time gift of $25,000) will have an annual academic scholarship named for themselves, or an honoree, for a minimum of 30 years. Donors are also encouraged to establish a mentor relationship with the recipient(s).

learning continuum

Our overarching goal is to positively impact every undergraduate brother every year with values-based leadership training and support.  Sigma Chi is focused on the relevant issues confronting our brothers on college campuses today, better educating these young men on alcohol misuse, drug abuse, hazing, sexual misconduct, suicide, depression and much more through an integrated presentation of our values.

By providing our members with world-class leadership initiatives, through the support of major gifts to the Foundation, Sigma Chi is helping young men develop into character-based leaders who are committed to the betterment of their chapters, campus and community.

The curriculum leads brothers to reflect upon leadership within themselves and the actions they take in everyday life, and think about how that impacts their communities and others. These modules allow our in-person programming to be more targeted and effective.

Click here to learn more about Sigma Chi’s leadership initiatives supported by the Sigma Chi Foundation.

planned giving

“I wanted to reflect that my career arc was fundamentally improved because of Sigma Chi. And I wanted to be able to leave a legacy beyond my own life that would provide that opportunity to others. ... What Sigma Chi and the Foundation do is help build good men. Our nation needs that, and I thought there was no better way to support that than through a planned gift to the Foundation so the next generation can have the benefit of Sigma Chi and learn and grow as young men.”

John Pasquantino UNLV 1984
White House Deputy Associate Director, Office of Management and Budget

Leave A Legacy

A planned gift to the Sigma Chi Foundation enables a brother to define their legacy and directly impact the lives of future Sigma Chis and our Fraternity.

Why are planned gifts so important? Our ‘One Voice’ strategic plan envisions a $100 million cash reserve that will expand world-class leadership programming and academic scholarships. While we are making great progress, planned gifts will be vital to our ultimate success.

By including Sigma Chi Foundation in your estate plan, you will help us achieve our goal and, at the same time, enjoy practical advantages for your estate and heirs.

Here are ways you can leave a legacy:

gifts by bequest

A bequest to Sigma Chi Foundation can be made for a specific amount, a percentage of your estate, or all or a portion of what is left after you have provided for your family. With a bequest, you retain control of and use of your assets during your lifetime and can potentially save on income taxes, capital gains and estate taxes.

life insurance gifts

Life insurance policies are powerful philanthropic tools often allowing a donor to make a much larger donation than they ever thought possible. Donors can name Sigma Chi Foundation as their beneficiary or transfer poilcy ownership to the Foundation and then make tax deductible gifts to pay the premiums. Sigma Chi Foundation receives the proceeds of the policy after your lifetime.

life income gifts

Your gift can be structured to provide you income for life. Sigma Chi Foundation will make a fixed payment to you for life with the remainder benefiting the Fraternity. Such arrangements are particularly appealing because donors can often reduce taxes and increase their spendable income. You benefit now and Sigma Chi benefits later.

gifts of retirement assets

Designating Sigma Chi Foundation as a beneficiary of all or a specified percentage of your 401(k) or other retirement plan assets can save your estate both income and estate taxes. Additionally, if you are age 70.5 or older, you can roll over up to $100,000 a year from your IRA as a charitable gift and count it towards your required minimum distribution.

bell chapter challenge

As an undergrad, your home chapter was your Sigma Chi world. It was where you forged your leadership skills, formed lifelong bonds of friendship and shaped what kind of man you would become. Please consider engaging with your Sigma Chi Foundation to continue that rich legacy at your chapter.

make your chapter a bell chapter

Sigma Chi has made a difference in the lives of over 300,000 brothers and these brothers want to give back. More importantly they want to give back to where they lived Sigma Chi, their own chapter. The Bell Chapter Challenge provides an excellent opportunity to make this happen and provides your chapter with enhanced benefits from the Foundation.

Your unrestricted, and tax-deductible, gift to the Sigma Chi Foundation will support the key leadership and scholarship programs provided by Sigma Chi for your chapter. These cutting-edge, valuesbased opportunities help change the lives of undergraduates at your chapter, bringing them to their full potential in college and life.

Our chapters need strong, values-based leaders to grow stronger. Engage with your Sigma Chi Foundation today and cultivate tomorrow’s leaders!

benefits provided to bell chapters

  • Krach Transformational Leaders Workshop
    Bell Chapters can send up to 5 additional attendees to Workshop for free.
    Gold level Bell Chapters will receive an additional $1,000 travel stipend for Workshop.
  • Horizons Leadership Training Program
    Bell Chapters will receive up to 2 designated slots for qualified undergraduates
  • Academic Scholarships
    Bell Chapters will receive up to 3 designated $1,000 academic scholarships for qualified undergraduates.
  • Education and Leadership Stipend
    Gold Level Bell Chapters will receive a $3,000 educational stipend to cover the costs of educational programming for the chapter.
  • Crossroads Program
    Bell Chapters will receive the Crossroads program at no cost.
LEVELS BLUE GOLD
Amount $10,000 per year
$250,000 Endow*
$20,000 per year
$500,000 Endow*
Chapter Benefits
  • 3 Additional free registration slots at KTLW (8 Total)
  • $250 KTLW Travel Stipend
  • 1 Designated Horizons Slot
  • 2 Designated $1,000 Academic Scholarships that will recognize lead donor
  • Crossroads retreat at no cost to Chapter
  • Donor plaque for chapter house
  • 1 Exclusive Bell Chapter Dinner invite at KTLW
  • 5 Additional free registration slots at KTLW (10 Total)
  • $1,000 KTLW Travel Stipend
  • 2 Designated Horizons Slots
  • 3 Designated $1,000 Academic Scholarships that will recognize lead donor
  • Crossroads retreat at no cost to Chapter
  • $3,000 Stipend for Journey Chapter Retreat
  • Donor plaque for chapter house
  • 1 Exclusive Bell Chapter Dinner invite at KTLW
  • Krach Transformational Leaders Workshop
    Bell Chapters can send up to 5 additional attendees to Workshop for free.
    Gold level Bell Chapters will receive an additional $1,000 travel stipend for Workshop.
  • Horizons Leadership Training Program
    Bell Chapters will receive up to 2 designated slots for qualified undergraduates
  • Academic Scholarships
    Bell Chapters will receive up to 3 designated $1,000 academic scholarships for qualified undergraduates.
  • Education and Leadership Stipend
    Gold Level Bell Chapters will receive a $3,000 educational stipend to cover the costs of educational programming for the chapter.
  • Crossroads Program
    Bell Chapters will receive the Crossroads program at no cost.
Blue  
Amount
  • $10,000 per year
  • $250,000 Endow*
Chapter
Benefits
  • 3 Additional free registration slots at KTLW (8 total)
  • $250 KTLW Travel Stipend
  • 1 Designated Horizons Slot
  • 2 Designated $1,000 Academic Scholarships that will recognize lead donor
  • Crossroads retreat at no cost to Chapter
  • Donor plaque for chapter house
  • 1 Exclusive Bell Chapter Dinner invite at KTLW
Gold  
Amount
  • $20,000 per year
  • $500,000 Endow*
Chapter
Benefits
  • 5 Additional free registration slots at KTLW (10 total)
  • $1000 KTLW Travel Stipend
  • 2 Designated Horizons Slot
  • 3 Designated $1,000 Academic Scholarships that will recognize lead donor
  • Crossroads retreat at no cost to Chapter
  • $3,000 Stipend for Journey Chapter Retreat
  • Donor plaque for chapter house
  • 1 Exclusive Bell Chapter Dinner invite at KTLW

*Based on accumulated cash in your chapter’s Bell Fund.

For more information contact Dakota Chavez, Associate Director of Development, at (847) 425-4408.

Did you know?

The Sigma Chi Foundation is eligible for all company matched gifts made to 501 (c) (3) foundations. Please check with your employer to see if you can double the size of your gift!

Bell Chapter List for 2019-2020

other ways to give

memorial gifts

You may wish to direct memorial gifts to the Sigma Chi Foundation to honor the memory of a deceased brother. Unrestricted gifts will be applied to the area of greatest need to support educational and leadership development opportunities for undergraduate members. Gifts may also be directed to a specific chapter or program fund. The Sigma Chi Foundation is a 501 (c) (3), charitable, educational organization and gifts are tax-deductible to the fullest extent allowable by law. Following is suggested language that may be used in an obituary to direct gifts to the Sigma Chi Foundation on behalf of a brother who enters the Chapter Eternal.

Contributions may be made to the Sigma Chi Foundation, 1714 Hinman Ave., Evanston, IL 60201.

matching gifts

The Sigma Chi Foundation is eligible for all company matched gifts made to 501 (c) (3) foundations. Please check with your employer to see if you can double the size of your gift!

distinguished visitors program

The Sigma Chi Foundation’s Distinguished Visitors program has provided alumni with an opportunity to reconnect to their Sigma Chi roots and impact undergraduate brothers since its inception in the 1980s. This year, 24 brothers attended the Huntsman Horizons Leadership Summit in Snowbird, Utah or the Balfour Leadership Training Workshop in Bowling Green, Ohio. During their visits, these men, who are among Sigma Chi’s most accomplished brothers, shared their values, their wisdom and their perspective on leadership with undergraduate brothers.

regional alumni receptions

Over the course of the 2018 to 2019 fiscal year, the Sigma Chi Foundation Board of Governors and staff made a targeted effort to connect with alumni in United States metropolitan areas with special reception events. Hosted by Foundation board members and donors, these events provided an opportunity to deliver updates from the General Fraternity and to discuss Sigma Chi’s forward direction. The receptions will expand to new regional locations over the present 2019 to 2020 fiscal year. For more information on these events or to receive a reminder when the Sigma Chi Foundation visits your area, e-mail the Foundation at foundation@sigmachi.org.

volunteering

Have some time on your hands and would like to contribute in other ways? Then consider the Fraternity’s volunteer programs. Help out on the international level in fraternity governance, on leadership programs such as the Balfour Leadership Training Workshop, or on one of the committees that keeps the organization running.

amazon smile

Did you know that you can contribute to Sigma Chi while making an online purchase through Amazon? Visit smile.amazon.com and select the Sigma Chi Foundation as your philanthropy of choice. A small percentage of each purchase made through Amazon Smile will support the leadership mission of Sigma Chi.