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.
Los Angeles, California Charitable Lead Inter Vivos Unit rust is a specialized legal arrangement that allows individuals to benefit their chosen charitable organizations while still retaining control over their assets during their lifetime. This type of trust combines the benefits of both charitable giving and estate planning. A Charitable Lead Inter Vivos Unit rust (CLT) is a trust created during the lifetime of the donor (inter vivos), where a charitable organization receives an income interest from the trust for a fixed period of time or until the donor's death. The income interest is usually determined by a fixed percentage of the initial trust's assets, revalued annually. There are different types of Los Angeles, California Charitable Lead Inter Vivos Unit rusts that individuals can choose from, including: 1. Non-Grantor Charitable Lead Inter Vivos Unit rust: In this type of trust, the donor is not entitled to any tax deductions for the assets transferred to the trust. The trust is responsible for paying income tax on its earnings. 2. Granter Charitable Lead Inter Vivos Unit rust: Here, the donor retains the ability to claim an income tax deduction for the present value of the income interest that will be paid to the charitable organization. The trust is treated as a granter trust for income tax purposes, meaning the donor is responsible for reporting income and paying taxes on the trust's earnings. 3. Charitable Lead Inter Vivos Unit rust with Flip Provision: This type of CLT can be established as a granter or non-grantor trust and includes a provision that changes the trust's income recipient from a charitable organization to non-charitable beneficiaries (typically family members) after a specified triggering event, such as the donor's death or the exhaustion of the fixed term. 4. Charitable Lead Inter Vivos Unit rust with Net Income Makeup Charitable Remainder Trust (TIMEOUT): This CLT provides for a net income makeup provision, meaning that if the trust's yearly distributions to the charitable organization are lower than the trust's net income, the shortfall can be made up in subsequent years. 5. Charitable Lead Inter Vivos Unit rust with Standard Payout: In this traditional form of CLT, the charitable organization receives a fixed percentage of the trust's initial assets, revalued annually, for a specified period. The remainder of the trust's assets is then distributed to non-charitable beneficiaries, such as family members, after the trust's expiration. By utilizing a Los Angeles, California Charitable Lead Inter Vivos Unit rust, individuals can make a lasting impact on the causes they care about while enjoying the benefits of income tax deductions, potential estate tax savings, and the ability to pass assets along to their loved ones. Consulting with an experienced estate planning attorney is crucial to determine the best type of CLT that suits one's goals and ensures compliance with local laws and regulations.Los Angeles, California Charitable Lead Inter Vivos Unit rust is a specialized legal arrangement that allows individuals to benefit their chosen charitable organizations while still retaining control over their assets during their lifetime. This type of trust combines the benefits of both charitable giving and estate planning. A Charitable Lead Inter Vivos Unit rust (CLT) is a trust created during the lifetime of the donor (inter vivos), where a charitable organization receives an income interest from the trust for a fixed period of time or until the donor's death. The income interest is usually determined by a fixed percentage of the initial trust's assets, revalued annually. There are different types of Los Angeles, California Charitable Lead Inter Vivos Unit rusts that individuals can choose from, including: 1. Non-Grantor Charitable Lead Inter Vivos Unit rust: In this type of trust, the donor is not entitled to any tax deductions for the assets transferred to the trust. The trust is responsible for paying income tax on its earnings. 2. Granter Charitable Lead Inter Vivos Unit rust: Here, the donor retains the ability to claim an income tax deduction for the present value of the income interest that will be paid to the charitable organization. The trust is treated as a granter trust for income tax purposes, meaning the donor is responsible for reporting income and paying taxes on the trust's earnings. 3. Charitable Lead Inter Vivos Unit rust with Flip Provision: This type of CLT can be established as a granter or non-grantor trust and includes a provision that changes the trust's income recipient from a charitable organization to non-charitable beneficiaries (typically family members) after a specified triggering event, such as the donor's death or the exhaustion of the fixed term. 4. Charitable Lead Inter Vivos Unit rust with Net Income Makeup Charitable Remainder Trust (TIMEOUT): This CLT provides for a net income makeup provision, meaning that if the trust's yearly distributions to the charitable organization are lower than the trust's net income, the shortfall can be made up in subsequent years. 5. Charitable Lead Inter Vivos Unit rust with Standard Payout: In this traditional form of CLT, the charitable organization receives a fixed percentage of the trust's initial assets, revalued annually, for a specified period. The remainder of the trust's assets is then distributed to non-charitable beneficiaries, such as family members, after the trust's expiration. By utilizing a Los Angeles, California Charitable Lead Inter Vivos Unit rust, individuals can make a lasting impact on the causes they care about while enjoying the benefits of income tax deductions, potential estate tax savings, and the ability to pass assets along to their loved ones. Consulting with an experienced estate planning attorney is crucial to determine the best type of CLT that suits one's goals and ensures compliance with local laws and regulations.
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.
