A Unitrust refers to a trust from which a fixed percentage of the net fair market value of the trusts assets valued annually, is paid each year to a beneficiary. In these trusts, the donor transfers property to a trust after retaining the right to receive payments from the trust for a specified term. Once the term ends, the trust estate is paid to a public charity designated by the donor. During a unitrust's term, a trustee invests the unitrust's assets and pays a fixed percentage of the unitrust's current value, as determined annually, to the income beneficiaries. If the unitrust's value goes up, its payout increases proportionately. Likewise, if the unitrust's value goes down, the amount it distributes also declines. Payments must be at least five percent of the trust's annual value and are made out of trust income, or trust principal if income is not adequate.
Florida Charitable Remainder Unit rust is a favorable estate planning tool that allows individuals to support charitable causes while receiving income for themselves or their designated beneficiaries. It is essentially an irrevocable trust created under Florida state law, where assets are transferred to a trustee who manages the trust and distributes income to the beneficiaries for a specified period or the duration of their lives. The primary purpose of a Florida Charitable Remainder Unit rust is to enable individuals to support their chosen charitable organizations, while also benefiting from potential tax advantages and ongoing income. By making a charitable contribution in the form of assets or property to the trust, the donor can receive an immediate charitable tax deduction. They can also potentially enjoy tax benefits by avoiding capital gains tax on the sale of appreciated assets when held by the trust. There are two main types of Florida Charitable Remainder Unit rusts: the Charitable Remainder Annuity Trust (CAT) and the Charitable Remainder Unit rust (CUT). In a CAT, the income received by the donor or beneficiaries is a fixed annuity amount determined at the creation of the trust, usually a fixed percentage of the initial trust value. However, in a CUT, the income distributed is a fixed percentage of the trust's value, recalculated annually. This means that if the trust's value increases, the income received also increases, potentially providing a hedge against inflation. Both types of trusts offer different advantages depending on the donor's financial goals and preferences. Furthermore, Florida Charitable Remainder Unit rusts can be established either during the donor's lifetime (inter vivos trust) or through their will or testament (testamentary trust). Establishing an inter vivos trust allows the donor to benefit from the income immediately and witness the long-term impact of their charitable endeavors. Conversely, a testamentary trust allows individuals to include charitable remainder provisions in their estate plan, ensuring a lasting impact even after their passing. In summary, a Florida Charitable Remainder Unit rust provides a unique opportunity for individuals to support charitable causes while enjoying financial benefits. The CAT and CUT are the main types of unit rusts available in Florida, each offering distinct advantages. Whether established during one's lifetime or through a testamentary trust, this estate planning tool enables donors to create a lasting legacy of philanthropy while potentially benefiting from tax advantages and ongoing income.
