Deciding on a payout rate for the trust.Naming the charitable remainder beneficiaries.The trust provisions you have control of when drafting your charitable remainder unitrust include: A flip unitrust is a net income unitrust that "flips" to a standard unitrust when a specified date or event occurs such as a birth, a death, or the sale of a hard-to-market property.It has the ability to makeup income in subsequent years if the income earned is less than the stated payout rate. A net income with makeup unitrust pays the stated amount from the trust to the extent of income earned in the trust without invading principal.The payout is the stated percentage of the trust assets as valued annually. A net income unitrust pays the stated amount from the trust to the extent of income earned in the trust without invading principal.A standard unitrust pays the stated amount from the trust regardless of how much income is earned.There are four types of Charitable Remainder Unitrusts: If the present value of the remainder interest equals at least 10% of the value of assets transferred into the trust, the trust will qualify as a charitable remainder unitrust. Generally, if the trust is for a term of years rather than for life, the income tax deduction will be larger. The older you are, the larger your income tax deduction. The "income tax deduction" you receive from a charitable remainder unitrust is based on an Internal Revenue Service (IRS) formula that considers the ages of the donors and income beneficiaries, the payout of the trust, and an IRS index rate known as the Applicable Federal Rate (AFR). Other Facts You Should Know about a Charitable Remainder Unitrust The professional staff at Philanthropies can assist you and your advisors in the creation of trust documents. A charitable remainder unitrust can have an impact on other parts of your financial and estate plan. At your death or the end of the period, the remaining assets are transferred to the charity of your choice.īefore you begin, you need to make sure your financial and legal advisors are part of your gift strategy team. You receive variable income for your life or a specified period of years. The assets are usually sold by the trustee and reinvested to match your income objectives. Your assets are transferred to the trustee you choose. How do I Make a Gift Using a Charitable Remainder Unitrust?Ī trust document tailored to your needs is drafted. Flexible investment possibilities for the beneficiary.Ability to choose the trustee (may be the donor).Assets transferred to the trust can be reinvested.Wants to make additional gifts to the trust.Tolerates some investment risk to provide for growth.Desires more income as the trust value increases.Needs income for life or a specified term of years.When the trust terminates, the remaining assets in the trust are transferred to the Church or one of its institutions. The trustee manages the trust assets and pays you or others you choose a variable income for life or for a term of years. Cash, securities, real property, or other assets are transferred into the trust. The most popular and flexible type of life income plan is a charitable remainder unitrust (CRUT).
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