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 Oregon Charitable Lead Inter Vivos Unit rust, also known as the Oregon CLT, is a legal and financial tool that enables individuals in Oregon to make charitable contributions while also providing income to beneficiaries. This charitable trust offers a unique way for donors to support their chosen charities and minimize their tax liability, while ensuring that their loved ones continue to benefit from the trust's income during a specified period. A Charitable Lead Inter Vivos Unit rust, or CLT, is a type of trust that allows the donor to transfer assets into the trust during their lifetime. The trust is managed by a trustee who distributes a predetermined percentage of the trust's value as income to one or more charitable organizations of the donor's choice. The remaining income, after deducting any applicable administrative expenses, is then distributed to the non-charitable beneficiaries, such as family members or friends. There are two main types of Oregon Charitable Lead Inter Vivos Unit rusts: the Charitable Lead Annuity Trust (FLAT) and the Charitable Lead Unit rust (CLUB). The FLAT provides a fixed annual payout to the designated charities, while the CLUB distributes a variable annual payout based on the fluctuating value of the trust's assets. In addition to these types, the Oregon CLT allows for various customization options, including the ability to establish the trust for a specific number of years or for the life of one or more individuals. The donor can also choose the charitable organizations they wish to support, ensuring that their philanthropic goals align with the trust's purpose. Utilizing an Oregon Charitable Lead Inter Vivos Unit rust provides several benefits for both the donor and the designated charities. Firstly, it allows the donor to make a significant charitable contribution while retaining control over the trust's assets during their lifetime. By including their loved ones as non-charitable beneficiaries, the donor can provide them with a steady income stream while supporting charitable causes. Furthermore, the Oregon CLT offers potential tax advantages. The donor may receive an income tax deduction for the present value of the charitable contributions made to the trust. The income generated from the trust's assets for the charitable beneficiaries is usually exempt from income tax, providing an additional incentive for philanthropy. In conclusion, the Oregon Charitable Lead Inter Vivos Unit rust is a powerful tool for individuals looking to support charitable organizations while benefiting their loved ones. With options for customization and two primary types to choose from, donors can structure their trust to align with their specific intentions. By utilizing this trust, individuals can make a lasting impact on the community, furthering their philanthropic goals, and potentially reducing their tax liability.
