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 Kings New York Charitable Lead Inter Vivos Unit rust is a popular estate planning tool that combines charitable giving with financial benefits for the donor. This trust allows individuals to make significant donations to charitable causes and receive income tax deductions while still retaining certain benefits for themselves or their beneficiaries. The Charitable Lead Inter Vivos Unit rust provides regular payments to the designated charitable organizations for a fixed duration or during the donor's lifetime. After this period, the remaining trust assets are passed on to the non-charitable beneficiaries, typically family members or individuals chosen by the donor. There are various types of Kings New York Charitable Lead Inter Vivos Unit rusts available to cater to different donor needs: 1. Non-Grantor Charitable Lead Inter Vivos Unit rust: In this type, the donor receives an immediate income tax deduction based on the present value of the payments to be made to the charitable organizations. However, the trust is required to pay income taxes on any income it generates. 2. Granter Charitable Lead Inter Vivos Unit rust: This type allows the donor to retain control of the trust and make additional contributions to it over time. The donor receives an income tax deduction based on the present value of the charitable payments, and the trust assets are not subject to income tax. 3. Charitable Lead Annuity Trust (FLAT): A FLAT is a variant of the Charitable Lead Inter Vivos Unit rust where the charitable payments are fixed annually as a specific dollar amount rather than a percentage of the trust's value. This allows donors to have greater certainty over the exact amount going to the charitable organizations. 4. Charitable Lead Unit rust (CLUB): Contrary to FLAT, a CLUB pays a fixed percentage of the trust's assets each year to the charitable organizations. The payments fluctuate based on the unit rust value, offering the potential for increased donations if the trust's value grows. 5. Charitable Lead Unit rust with Makeup Provisions: This type of unit rust allows the donor to compensate for any underpayments made to the charitable organizations in prior years by making additional contributions to the trust. It provides flexibility and ensures that the intended charitable donations are fulfilled. Overall, the Kings New York Charitable Lead Inter Vivos Unit rust presents a powerful opportunity for individuals to support worthwhile causes while enjoying tax advantages and providing for their loved ones. Consulting with an estate planning attorney or financial advisor can help determine the most suitable type of trust based on personal circumstances and philanthropic goals.The Kings New York Charitable Lead Inter Vivos Unit rust is a popular estate planning tool that combines charitable giving with financial benefits for the donor. This trust allows individuals to make significant donations to charitable causes and receive income tax deductions while still retaining certain benefits for themselves or their beneficiaries. The Charitable Lead Inter Vivos Unit rust provides regular payments to the designated charitable organizations for a fixed duration or during the donor's lifetime. After this period, the remaining trust assets are passed on to the non-charitable beneficiaries, typically family members or individuals chosen by the donor. There are various types of Kings New York Charitable Lead Inter Vivos Unit rusts available to cater to different donor needs: 1. Non-Grantor Charitable Lead Inter Vivos Unit rust: In this type, the donor receives an immediate income tax deduction based on the present value of the payments to be made to the charitable organizations. However, the trust is required to pay income taxes on any income it generates. 2. Granter Charitable Lead Inter Vivos Unit rust: This type allows the donor to retain control of the trust and make additional contributions to it over time. The donor receives an income tax deduction based on the present value of the charitable payments, and the trust assets are not subject to income tax. 3. Charitable Lead Annuity Trust (FLAT): A FLAT is a variant of the Charitable Lead Inter Vivos Unit rust where the charitable payments are fixed annually as a specific dollar amount rather than a percentage of the trust's value. This allows donors to have greater certainty over the exact amount going to the charitable organizations. 4. Charitable Lead Unit rust (CLUB): Contrary to FLAT, a CLUB pays a fixed percentage of the trust's assets each year to the charitable organizations. The payments fluctuate based on the unit rust value, offering the potential for increased donations if the trust's value grows. 5. Charitable Lead Unit rust with Makeup Provisions: This type of unit rust allows the donor to compensate for any underpayments made to the charitable organizations in prior years by making additional contributions to the trust. It provides flexibility and ensures that the intended charitable donations are fulfilled. Overall, the Kings New York Charitable Lead Inter Vivos Unit rust presents a powerful opportunity for individuals to support worthwhile causes while enjoying tax advantages and providing for their loved ones. Consulting with an estate planning attorney or financial advisor can help determine the most suitable type of trust based on personal circumstances and philanthropic goals.
