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.
Guam Charitable Remainder Unit rust, also known as Guam CUT, is a legal and financial tool designed to benefit both donors and charities on the island of Guam. This estate planning option allows individuals to make a charitable gift while still receiving income from the donated assets. Guam Cuts are established under the Guam Uniform Management of Institutional Funds Act (GUM IFA). A Guam Charitable Remainder Unit rust works by transferring assets, such as cash, securities, or real estate, into an irrevocable trust. The trust is managed by a trustee, typically a financial institution or a professional trustee. The trustee then invests those assets to generate income for the donor or other named beneficiaries. There are several types of Guam Charitable Remainder Unit rusts, each with its own unique features and benefits: 1. Standard Charitable Remainder Unit rust: This is the most common form of CUT that provides beneficiaries with a fixed percentage (typically between 5% and 8%) of the trust’s net fair market value each year. The income payments are recalculated annually based on the trust's value. 2. Net Income with Make-Up Charitable Remainder Unit rust (TIMEOUT): This type of CUT allows beneficiaries to receive either the trust's net income from year to year or a fixed percentage of the net fair market value, whichever is lower. If the trust generates low or no income in certain years, any shortfall can be made up in future years with higher income. 3. Net Income Charitable Remainder Unit rust (NICEST): Beneficiaries of this CUT receive only the trust's net income each year, disregarding any appreciation in the trust’s value. This option ensures a steady income stream for beneficiaries. 4. Flip Charitable Remainder Unit rust: With this CUT, there is a predetermined triggering event (often the sale of an asset) that switches the trust's income stream from a lower paying asset to a higher paying asset. This feature allows donors to defer receiving income until a more advantageous time. By establishing a Guam Charitable Remainder Unit rust, individuals can achieve various objectives, such as supporting charitable causes in Guam, receiving tax benefits, and ensuring a reliable income stream for themselves or their loved ones. It is important to consult with legal and financial professionals to determine the most suitable type of CUT based on individual goals and circumstances.
