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These variations apply only to the charitable remainder unitrust.
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» “Net income unitrust”.
» The option of the “make up provision”.
» “Flip unitrust”.
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The net income unitrust differs from the standard unitrust.
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If the net income of the trust < percentage payment, the donor only receives the net income.
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If the net income > percentage payment, the donor gets the percentage payment.
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A net income unitrust maximizes the gift to Brown.
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Through a net income unitrust one can make a gift of assets that do not produce much income.
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Other ideal assets for a net income unitrust include non-marketable stock.
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The make up provision allows the income in excess of the percentage payment to be applied to the payments of years when the income of the trust is less than the percentage payment.
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There is no expiration on the make up provision. The trustee keeps track of the "deficit account" for all future payments.
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In the case of real estate: the low initial payments can be “made up” later when the real estate, appreciated in value, sells.
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A net income unitrust: gives the net income or the percentage payment.
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The make up provision: allows for larger payment when an asset is sold.
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The “flip variation”: allows a net income trust to become a straight percentage trust after a specific event (e.g. a date, the sale of the asset).
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Tax implications:
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The tax deduction for a net income unitrust is the same as the straight percentage trust.
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A net income unitrust makes a bigger gift to Brown.
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A net income unitrust makes use of an asset that does not produce much income.
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Talk to Planned Giving about the many options available.
