A Unitrust refers to a trust from which a fixed percentage of the net fair market value of the trusts assets valued annually, is paid each year to a beneficiary. In these trusts, the donor transfers property to a trust after retaining the right to receive payments from the trust for a specified term. Once the term ends, the trust estate is paid to a public charity designated by the donor. During a unitrust's term, a trustee invests the unitrust's assets and pays a fixed percentage of the unitrust's current value, as determined annually, to the income beneficiaries. If the unitrust's value goes up, its payout increases proportionately. Likewise, if the unitrust's value goes down, the amount it distributes also declines. Payments must be at least five percent of the trust's annual value and are made out of trust income, or trust principal if income is not adequate.
A South Carolina Charitable Remainder Unit rust (SCC RUT) is a legally-binding agreement that benefits both charitable organizations and individual beneficiaries. It is a unique method of philanthropy that provides income to beneficiaries while supporting charitable causes in South Carolina. This type of trust offers tax benefits and flexibility, making it a popular option for individuals looking to leave a lasting impact. The SCC RUT functions by allowing an individual, known as the granter, to transfer assets, such as cash, stocks, real estate, or other valuable properties, into the trust. These assets are then managed and ultimately distributed to one or more charitable organizations of the granter's choice. However, unlike other charitable trusts, the SCC RUT also allows the granter or other beneficiaries to receive an annual income from the trust during their lifetime. The amount of income beneficiaries receive is determined by a fixed percentage of the trust's fair market value, which is reevaluated annually. The granter can choose this percentage when setting up the trust, allowing for flexibility in income planning. Additionally, the granter can change the charitable beneficiaries throughout the lifetime of the trust, ensuring support for different organizations based on evolving philanthropic goals. The SCC RUT also offers tax advantages to the granter. When assets are transferred into the trust, the granter receives an immediate income tax deduction for the charitable portion of the contribution. This reducibility can effectively reduce the upfront costs associated with funding the trust. Furthermore, the trust is exempt from capital gains taxes, allowing appreciated assets to be sold without incurring tax liabilities. There are two main types of South Carolina Charitable Remainder Unit rusts: 1. Charitable Remainder Unit rust with a Charitable Income Recipient (SCC RUT-CIR): This type of trust provides income to both the granter and a charitable organization. The granter is entitled to a predetermined percentage of the trust's annual value, and the remaining income is distributed to the designated charitable entity. 2. Charitable Remainder Unit rust with a Non-Charitable Income Recipient (SC CRUT-NCIR): This version of the trust allows the granter to designate a non-charitable income recipient, such as a family member or friend, to receive a predetermined percentage of the trust's annual value. The remaining income is then given to the chosen charitable organization(s). In conclusion, a South Carolina Charitable Remainder Unit rust is a powerful instrument that combines philanthropy with financial planning. It allows individuals to support charitable causes while benefiting from income generated by the trust. The SCC RUT offers tax advantages, flexibility in income planning, and the opportunity to make a significant impact on South Carolina's charitable organizations.
