The Retirement Unitrust
Julie Metzger grew up on a farm. When her parents passed away she inherited the farm.
When Julie was young, the farm was out in the country, but the city has grown so much that the farm is now within the city limits. Several developers would like to build homes on the farmland.
JULIE: My husband, Dick, and I have received modest payments from the farm over the years. I allowed a neighboring farmer to graze his cows there until recently. Since I inherited the farm from my parents several years ago, the value has greatly increased.
DICK: We checked with our tax advisor and the farm could be sold, but there would be a very large tax to pay. Since it is a good time to sell the land we would like to go ahead with a sale, then let the proceeds grow for about 10 years until we plan to retire. In fact, we are hopeful that we can sell tax free and allow the proceeds to grow tax free.
JULIE: I was excited to learn that there is a charitable plan that provides for our retirement. We could transfer the land into a special trust. Once inside this trust, the farm could be sold tax free and the cash invested for growth. The proceeds would grow tax free inside the trust until we retire. At that time, the payouts would be taxable, but we could have as much as $900,000 in the trust.
DICK: We will enjoy a very nice retirement. We already have an IRA and are planning to use that for retirement. With the extra income from this retirement trust, we will be able to travel and really enjoy our golden years.