Charitable Trust Definitions

Florida Residents can use a variaty of Charitable Trusts with the Estate Planning and to help reduce estate taxes in their Florida Probate.

Charitable Lead Unitrust (CLUT): Income goes to charity and remainder to one’s heirs or beneficiaries. Generally for the very rich and for those whose children won’t need the income until years later when the trust ends. For example Jacklyn Kennedy Onassis used this to save taxes when she was seeking to benefit John Kennedy Jr. and Carolyn Kennedy.

Charitable Trust – One of several different types of charitable trusts, including Charitable Lead trusts and Charitable Remainder Trusts, established to benefit a particular charity or the public. Typically charitable trusts are established as part of an estate plan to lower or avoid imposition of Federal (and some states’) estate and gift taxes and/or to save capital gains tax. It can be a win win situation since the donor is able to achieve a tax reduction while still providing for a very worthwhile charity that provides a great service to the public. When this is done during life an income tax deduction is available then the property is out of the estate for estate tax purposes or will generate a deduction to remove it. Some of this tax saving is often the put into the premiums for a life insurance policy as a wealth replacement technique. The insurance policy can be designed so the payment of the premiums will not result in a gift and the value of policy is not included in the estate. Used in this combination the donor is able to provide for a gift to charity through the charitable trust they can still receive income from the trust and despite their gift to charity their children can end up with as much and in some cases more money then if no charitable trust planning had been taken.

Charitable Remainder Trust (CRT) A trust funded with assets that go to charity upon death. The donor/trust creator can sell the assets without paying capital gains taxes and receive an annual income. Will also receive a tax deduction for the charitable gift and eliminate appreciated assets from one’s estate.

Charitable Remainder Annuity Trust A charitable remainder trust in which the trust donor is paid an annual fixed dollar amount.

Charitable Remainder Unitrust: This pays an annual fixed percentage of the fluctuating value of trust assets.

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