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.
Oklahoma Charitable Lead Inter Vivos Unit rust (CLT) is a specific type of charitable trust designed to benefit both charitable organizations and non-charitable beneficiaries. It allows individuals to make a contribution to a trust which then generates income for designated charitable organizations for a certain period of time or for a specific number of years. Here is a detailed description of the Oklahoma Charitable Lead Inter Vivos Unit rust, along with some relevant keywords: The Oklahoma Charitable Lead Inter Vivos Unit rust, also known as the Oklahoma CLT, is a legal entity established under Oklahoma state law that combines charitable giving with the benefit of potential tax savings. This type of trust is a tool commonly used by individuals who have philanthropic goals and wish to provide ongoing financial support to their chosen charitable organizations while minimizing estate taxes. Keywords: Oklahoma Charitable Lead Inter Vivos Unit rust, charitable trust, Oklahoma CLT, charitable organizations, non-charitable beneficiaries, contribution, income generation, designated, specific period of time, specific number of years, legal entity, philanthropic goals, financial support, estate taxes. There are two main types of Oklahoma Charitable Lead Inter Vivos Unit rusts: 1. Charitable Lead Annuity Unit rust (FLAT): This type of CLT provides a fixed annuity payment to one or more charitable organizations for a set term or a fixed number of years. The annuity payment is calculated based on a predetermined percentage of the initial trust assets' value. At the end of the term, any remaining assets are distributed to the non-charitable beneficiaries, such as family members or other designated individuals. Keywords: Charitable Lead Annuity Unit rust, FLAT, fixed annuity payment, set term, fixed number of years, predetermined percentage, initial trust assets' value, remaining assets, non-charitable beneficiaries, distribution. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, this type of CLT provides a variable income stream to charitable organizations for a specific period or term. The income distribution is based on a fixed percentage of the trust's value, which is reassessed annually. The non-charitable beneficiaries receive the remaining assets of the trust at the end of the predetermined term. Keywords: Charitable Lead Unit rust, CLUB, variable income stream, specific period or term, fixed percentage, reassessed annually, remaining assets, predetermined term, non-charitable beneficiaries. In conclusion, the Oklahoma Charitable Lead Inter Vivos Unit rust is an effective estate planning tool that enables individuals to support charitable organizations while also benefiting their chosen non-charitable beneficiaries. By understanding the different types of Cuts available, individuals can tailor their philanthropic goals and maximize the positive impact of their charitable giving within the state of Oklahoma.
