Gerhard (Gery) Dubbert worked hard all his life as an insurance agent, farmer and astute financial planner. More importantly, he was a devoted husband and father.
His wife, Marcia, introduced him to her alma mater, Olivet. Gery caught her passion for the University, and they became ardent supporters.
About 10 years before his death in 2011, Gery approached Olivet with a conundrum. He had a couple of fully taxable IRAs that his family would receive when he passed away. Unfortunately, according to his accountant, Gery’s loved ones would only receive about 30 percent of the funds after both income and estate taxes were paid.
Gery wanted to help his family avoid these hefty taxes so they could inherit more of his estate. He also wanted to assist Olivet students through a scholarship.
As Olivet’s development staff worked with Gery, the notion of establishing a Testamentary Unitrust was presented. This is a Trust that is established while the individual is living but is not funded until death. After the Trust is funded, it makes regular payments to the surviving spouse or other loved ones for life or a set term of years. A Testamentary Unitrust is often an ideal option for folks who are looking to reduce income, capital gains and/or estate taxes and at the same time provide income for loved ones after death. It also ensures a meaningful gift to charity.
Gery recognized that the Testamentary Unitrust was an ideal option and with the help of the ONU development staff his plan was implemented. By making his Unitrust the beneficiary of his IRAs, he was able to easily put in place a plan for funding his Unitrust.
To illustrate the benefits of this Testamentary Unitrust to Gery’s heirs as well as to Olivet, suppose the IRAs were worth $100,000 at the time of his death. Without the Unitrust, his heirs were expected to net about $30,000 and the rest would be going to the IRS in taxes. However, with the Unitrust Gery’s loved ones would begin receiving payments of 7% or about $7,000 every year. Because the payments are always 7% of the investments’ market value, they may increase or decrease somewhat depending on the market returns. If the investment returns match the average long-term yield of the market, the heirs will receive a total of about $35,000 over five years and around $70,000 over 10 years.
After discovering the merits of his first Unitrust, Gery opted to establish a second Testamentary Unitrust, which he funded with highly appreciated farm property.
Gery left a wonderful legacy through his planned gifts. His wife and loved ones will likely receive a larger portion of his estate, and when they pass away, the remainder of the estate will benefit worthy students at Olivet via the Gerhard and Marcia Dubbert Endowed Scholarship. Gery’s legacy will live on for many years.
Many people don’t realize their full giving potential. Call our office today to discuss estate planning options. Like Gery, you too may be able to make a far greater impact than you ever imagined – for you, your family, and for Olivet.