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.
The New Jersey Charitable Lead Inter Vivos Unit rust is a legal and financial instrument designed to provide a charitable gift while still enabling the donor to retain an income stream or control over the assets during their lifetime. This type of trust combines characteristics of both a charitable lead trust and a unit rust, offering various benefits to both the donor and the designated charitable organizations. The primary purpose of a Charitable Lead Inter Vivos Unit rust is to support charitable causes that the donor is passionate about. The donor contributes assets, such as cash, securities, or real estate, to the trust, which is then invested to generate income. The income generated is paid to one or more charitable organizations for a specified period or until the donor's passing. One significant advantage of the New Jersey Charitable Lead Inter Vivos Unit rust is its ability to provide an income tax deduction for the donor based on the present value of the future charitable payments. This deduction can help reduce the overall tax burden, allowing the donor to further support their favorite causes. There are two primary types of New Jersey Charitable Lead Inter Vivos Unit rusts: 1. Charitable Lead Annuity Unit rust (FLAT): In this type of trust, the income distribution to the charitable organizations is made as a fixed annual dollar amount or a fixed percentage of the initial trust's net fair market value. The distribution amount remains constant throughout the specified term. Any additional growth of the trust assets will benefit the donor or their designated beneficiaries after the charitable distribution period ends. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, a Charitable Lead Unit rust pays a variable annual distribution based on the revaluation of the trust's net fair market value each year. This means that if the trust investments perform well and the value increases, the charitable payments also increase. Conversely, if the investments underperform, the charitable payments may decrease. After the specified term ends, any remaining trust assets are returned to the donor or their designated beneficiaries. In summary, the New Jersey Charitable Lead Inter Vivos Unit rust is a valuable estate planning tool that allows individuals to support charitable causes they care about while enjoying certain financial benefits during their lifetime. By choosing between the Charitable Lead Annuity Unit rust (FLAT) or the Charitable Lead Unit rust (CLUB), donors can tailor their philanthropic legacy to match their specific financial goals and wishes.The New Jersey Charitable Lead Inter Vivos Unit rust is a legal and financial instrument designed to provide a charitable gift while still enabling the donor to retain an income stream or control over the assets during their lifetime. This type of trust combines characteristics of both a charitable lead trust and a unit rust, offering various benefits to both the donor and the designated charitable organizations. The primary purpose of a Charitable Lead Inter Vivos Unit rust is to support charitable causes that the donor is passionate about. The donor contributes assets, such as cash, securities, or real estate, to the trust, which is then invested to generate income. The income generated is paid to one or more charitable organizations for a specified period or until the donor's passing. One significant advantage of the New Jersey Charitable Lead Inter Vivos Unit rust is its ability to provide an income tax deduction for the donor based on the present value of the future charitable payments. This deduction can help reduce the overall tax burden, allowing the donor to further support their favorite causes. There are two primary types of New Jersey Charitable Lead Inter Vivos Unit rusts: 1. Charitable Lead Annuity Unit rust (FLAT): In this type of trust, the income distribution to the charitable organizations is made as a fixed annual dollar amount or a fixed percentage of the initial trust's net fair market value. The distribution amount remains constant throughout the specified term. Any additional growth of the trust assets will benefit the donor or their designated beneficiaries after the charitable distribution period ends. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, a Charitable Lead Unit rust pays a variable annual distribution based on the revaluation of the trust's net fair market value each year. This means that if the trust investments perform well and the value increases, the charitable payments also increase. Conversely, if the investments underperform, the charitable payments may decrease. After the specified term ends, any remaining trust assets are returned to the donor or their designated beneficiaries. In summary, the New Jersey Charitable Lead Inter Vivos Unit rust is a valuable estate planning tool that allows individuals to support charitable causes they care about while enjoying certain financial benefits during their lifetime. By choosing between the Charitable Lead Annuity Unit rust (FLAT) or the Charitable Lead Unit rust (CLUB), donors can tailor their philanthropic legacy to match their specific financial goals and wishes.
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.
