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 Harris Texas Charitable Lead Inter Vivos Unit rust (CLT) is a unique estate planning tool that allows individuals to support charitable causes while still retaining some control over their assets. This trust is established during the lifetime of the donor, referred to as an inter vivos trust, and it is commonly used by residents of Harris County, Texas. A Charitable Lead Inter Vivos Unit rust is a type of trust that combines the features of a charitable lead trust (CLT) and a unit rust. In essence, it allows the donor to transfer assets into the trust and select one or more charitable organizations as the beneficiaries. These organizations typically receive a fixed or variable percentage of the trust's value for a specified period of time, known as the lead period. At the end of the lead period, the remaining assets in the trust are distributed back to the donor or other non-charitable beneficiaries, such as family members. One key advantage of the Harris Texas Charitable Lead Inter Vivos Unit rust is the potential for minimizing estate and gift taxes while making a significant impact on charitable causes. By transferring assets to the trust, the donor can receive an immediate income tax deduction, based on the present value of the expected charitable payments. This deduction can help reduce the donor's taxable income, potentially resulting in lower tax liabilities. There are various types of Harris Texas Charitable Lead Inter Vivos Unit rusts, including: 1. Charitable Lead Annuity Trust (FLAT): In this type of trust, a fixed annual payment is made to the charitable beneficiaries, regardless of the trust's investment performance. The donor determines the fixed payout amount during the lead period. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, the CLUB pays a variable percentage of the trust's value, recalculated annually. This ensures that the charitable payments keep pace with the trust's investment returns. The donor has the flexibility to choose a payout percentage within certain limits. 3. Charitable Lead Net Income Unit rust (CLIT): In a CLIT, the charitable payment is based on the trust's net income generated each year. This type of trust allows for fluctuations in income and can provide a higher degree of certainty regarding the annual payout. 4. Charitable Lead Net Income with Makeup Unit rust (CLAIMED): Similar to the CLIT, the CLAIMED allows for charitable payments based on net income but includes a makeup provision. If the trust's net income falls below a certain percentage, any shortfall can be made up in future years, ensuring that the charitable beneficiaries receive their designated payments. Overall, the Harris Texas Charitable Lead Inter Vivos Unit rust offers residents of Harris County the opportunity to support charitable causes close to their hearts while enjoying potential tax benefits. Consulting with an experienced estate planning attorney or financial advisor is crucial to understanding the intricacies and benefits of implementing such a trust.The Harris Texas Charitable Lead Inter Vivos Unit rust (CLT) is a unique estate planning tool that allows individuals to support charitable causes while still retaining some control over their assets. This trust is established during the lifetime of the donor, referred to as an inter vivos trust, and it is commonly used by residents of Harris County, Texas. A Charitable Lead Inter Vivos Unit rust is a type of trust that combines the features of a charitable lead trust (CLT) and a unit rust. In essence, it allows the donor to transfer assets into the trust and select one or more charitable organizations as the beneficiaries. These organizations typically receive a fixed or variable percentage of the trust's value for a specified period of time, known as the lead period. At the end of the lead period, the remaining assets in the trust are distributed back to the donor or other non-charitable beneficiaries, such as family members. One key advantage of the Harris Texas Charitable Lead Inter Vivos Unit rust is the potential for minimizing estate and gift taxes while making a significant impact on charitable causes. By transferring assets to the trust, the donor can receive an immediate income tax deduction, based on the present value of the expected charitable payments. This deduction can help reduce the donor's taxable income, potentially resulting in lower tax liabilities. There are various types of Harris Texas Charitable Lead Inter Vivos Unit rusts, including: 1. Charitable Lead Annuity Trust (FLAT): In this type of trust, a fixed annual payment is made to the charitable beneficiaries, regardless of the trust's investment performance. The donor determines the fixed payout amount during the lead period. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, the CLUB pays a variable percentage of the trust's value, recalculated annually. This ensures that the charitable payments keep pace with the trust's investment returns. The donor has the flexibility to choose a payout percentage within certain limits. 3. Charitable Lead Net Income Unit rust (CLIT): In a CLIT, the charitable payment is based on the trust's net income generated each year. This type of trust allows for fluctuations in income and can provide a higher degree of certainty regarding the annual payout. 4. Charitable Lead Net Income with Makeup Unit rust (CLAIMED): Similar to the CLIT, the CLAIMED allows for charitable payments based on net income but includes a makeup provision. If the trust's net income falls below a certain percentage, any shortfall can be made up in future years, ensuring that the charitable beneficiaries receive their designated payments. Overall, the Harris Texas Charitable Lead Inter Vivos Unit rust offers residents of Harris County the opportunity to support charitable causes close to their hearts while enjoying potential tax benefits. Consulting with an experienced estate planning attorney or financial advisor is crucial to understanding the intricacies and benefits of implementing such a trust.
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.
