In a charitable lead trust, a donor transfers property to the lead trust, which pays a percentage of the value of the trust assets, usually for a term of years, to the charity. At the end of the trust term, the remaining assets in the trust and any growth it has realized are passed to donor's heirs. Although there is no income tax deduction when the donor creates a charitable lead trust, his/her gift or estate tax is greatly discounted and any growth is passed to his/her heirs gift and estate tax free.
In a charitable lead unitrust, a donor irrevocably transfers cash, closely held securities or other valuable property to a trustee who, during the unitrusts term, invests the unitrust's assets. Each year, the trustee distributes a fixed percentage of the unitrust's net asset value, as calculated annually, to a named charity. These payments are made out of trust income (or trust principal if the trust income is not adequate) and are tax deductible as a charitable contribution for the year in which they are made. If, however, trust income exceeds the charitable payment for a given year, the trust pays income tax on the excess.
When the lead unitrust term ends, the unitrust distributes the remainder of its accumulated assets to a non-charitable remainderman, usually family members or other beneficiaries named by the donor. That amount is subject to federal gift tax based on the current fair market value of the gift at the time the trust is established. Gift tax is paid on the remainder interest as calculated from the current fair market value of the asset at the time the trust is established; generally this amount is much less than the estate tax would be on the asset as calculated at the time it is inherited.
Keywords: Arizona, charitable lead inter vivos unit rust, types Description: The Arizona Charitable Lead Inter Vivos Unit rust, commonly known as an Arizona CLT, is a specific type of charitable trust that allows individuals to make a contribution to a charitable cause while also providing for their own beneficiaries. This legal arrangement provides flexibility and tax benefits, making it an attractive option for individuals looking to support charities and secure financial stability for their loved ones. One of the primary features of the Arizona Charitable Lead Inter Vivos Unit rust is that it allows donors to provide a regular stream of income to a charitable organization for a set period of time. This income, often a percentage of the trust's assets, is known as the lead interest. Upon the expiration of this period, the remaining assets are then transferred to the designated beneficiaries, typically family members or other loved ones. There are two main types of Arizona Charitable Lead Inter Vivos Unit rusts. The first is the Charitable Lead Annuity Unit rust (FLAT), which provides a fixed annuity to the charity throughout the specified term. This type of unit rust is often utilized when the donor wants to ensure a consistent income stream for the charity and has a specific dollar amount in mind. The second type is the Charitable Lead Unit rust (CLUB), which offers a fluctuating income stream based on a fixed percentage of the trust's value. Unlike the FLAT, the CLUB allows for potential growth in the trust's assets, potentially resulting in higher distributions to both the charitable organization and the ultimate beneficiaries. Arizona Charitable Lead Inter Vivos Unit rusts offer significant tax benefits. Donors are eligible for an income tax deduction for the present value of the charitable interest, which reduces their taxable income. Additionally, the assets transferred to the beneficiaries at the end of the trust term are typically not subject to gift or estate taxes, further enhancing the wealth transfer possibilities. In summary, the Arizona Charitable Lead Inter Vivos Unit rust is a powerful estate planning tool that combines philanthropy with financial planning. By contributing to a charitable cause while providing for loved ones, individuals can have a lasting impact on their community while securing a secure financial future for their beneficiaries.Keywords: Arizona, charitable lead inter vivos unit rust, types Description: The Arizona Charitable Lead Inter Vivos Unit rust, commonly known as an Arizona CLT, is a specific type of charitable trust that allows individuals to make a contribution to a charitable cause while also providing for their own beneficiaries. This legal arrangement provides flexibility and tax benefits, making it an attractive option for individuals looking to support charities and secure financial stability for their loved ones. One of the primary features of the Arizona Charitable Lead Inter Vivos Unit rust is that it allows donors to provide a regular stream of income to a charitable organization for a set period of time. This income, often a percentage of the trust's assets, is known as the lead interest. Upon the expiration of this period, the remaining assets are then transferred to the designated beneficiaries, typically family members or other loved ones. There are two main types of Arizona Charitable Lead Inter Vivos Unit rusts. The first is the Charitable Lead Annuity Unit rust (FLAT), which provides a fixed annuity to the charity throughout the specified term. This type of unit rust is often utilized when the donor wants to ensure a consistent income stream for the charity and has a specific dollar amount in mind. The second type is the Charitable Lead Unit rust (CLUB), which offers a fluctuating income stream based on a fixed percentage of the trust's value. Unlike the FLAT, the CLUB allows for potential growth in the trust's assets, potentially resulting in higher distributions to both the charitable organization and the ultimate beneficiaries. Arizona Charitable Lead Inter Vivos Unit rusts offer significant tax benefits. Donors are eligible for an income tax deduction for the present value of the charitable interest, which reduces their taxable income. Additionally, the assets transferred to the beneficiaries at the end of the trust term are typically not subject to gift or estate taxes, further enhancing the wealth transfer possibilities. In summary, the Arizona Charitable Lead Inter Vivos Unit rust is a powerful estate planning tool that combines philanthropy with financial planning. By contributing to a charitable cause while providing for loved ones, individuals can have a lasting impact on their community while securing a secure financial future for their beneficiaries.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
