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CLUTCharitable Lead Unitrust
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Smith (age 85) transferred property worth $100,000 to a charitable lead unitrust that is a grantor trust.
(3) Multiply the value of the property transferred to the charitable lead unitrust ($100,000) by the single life unitrust factor for a person age 85 at a 5% payout rate (.25484) - $100,000 x .25484 = $25,484.
(3) Multiply the value of the property transferred to the charitable lead unitrust ($100,000) by the term certain unitrust factor for 20 years at a 5% payout rate (.641514)--$100,000 x .641514 = $64,151.
Options generally used to reduce estate and gift taxes are the charitable lead annuity trust and the charitable lead unitrust. Options generally used to reduce income taxes offers the life estate agreement.
These include the family limited partnership, charitable lead annuity trust, charitable lead unitrust, and the demand trust.
The charitable lead unitrust (CLUT) can be an attractive option to fund the rollout, especially when the insurance trust is structured to be a generation-skipping trust.
To be qualified, a charitable lead interest must be in the form of (1) a guaranteed annuity (a charitable lead annuity trust (CLAT)) or (2) a unitrust (a charitable lead unitrust (CLUT)).(2) An inter vivos trust is created during life; a testamentary trust is established at death.
(35) On July 28, 2008, the IRS released sample forms for both inter vivos and testamentary charitable lead unitrusts (CLUTs).
Charitable lead unitrusts (CLUTs) distribute a fixed percentage of the net fair market value of the trust property, determined annually.
This distinction is independent of the structure of the payments and can apply to both charitable lead annuity trusts and charitable lead unitrusts. Grantor trusts have as the remainder beneficiary the donor of the assets of the trust, and are less common than nongrantor trusts.
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