United States
Charitable trusts may be set up inter vivos, during a donor's life, or as a part of a trust or will at death, as testamentary. US charitable trusts vary primarily in two factors: firstly whether the charity is paid first (and the remainder, after trust termination, goes to beneficiaries, such as heirs or back to the donor) – a "charitable lead trust", or whether the charity is paid last (after termination of the trust, after other beneficiaries have received payments) – a "charitable remainder trust"; and secondly whether the payments are a fixed amount "annuity trust", or a percentage of principle "unitrust".
Charitable remainder trusts are irrevocable structures established by a donor to provide an income stream to the income beneficiary, while the public charity or private foundation receives the remainder value when the trust terminates. These "split interest" trusts are defined in §664 of the Internal Revenue Code of 1986 as amended and are normally tax-exempt. A section 664 trust makes its payments, either of a fixed amount (charitable remainder annuity trust §664(d)(1)(D)) or a percentage of trust principal (charitable remainder unitrust), to whomever the donor chooses to receive income. Normally, the donor may claim a charitable income tax deduction, and may not have to pay an immediate capital gains tax when the charitable remainder trust disposes of the appreciated asset and purchases other property as it diversifies its portfolio of trust property. At the end of the trust term, which may be based on either lives or a term of years, the charity receives whatever amount is left in the trust. Charitable remainder unitrusts (§664(d)(2)(D)- paying a fixed percentage) provide some flexibility in the distribution of income, and may be helpful in retirement planning, while charitable remainder annuity trusts paying a fixed dollar amount are more rigid and usually appeal to much older donors unconcerned about inflation's impact on income distributions who are using cash or marketable securities to fund the trust.
Parents who have a child with a disability should ensure that the inheritance they leave for their child does not affect their child's eligibility for social assistance programs. A Henson trust can be useful to ensure this.
Charitable lead trusts make payments, either of a fixed amount (charitable lead annuity trust) or a percentage of trust principal (charitable lead unitrust), to charity during its term. At the end of the trust term, the remainder can either go back to the donor or to heirs named by the donor. The donor may sometimes claim a charitable income tax deduction or a gift/estate tax deduction for making a lead trust gift, depending on the type of a charitable lead trust. Generally, a non-grantor lead trust does not generate a current income tax deduction, but it eliminates the asset (or part of the asset’s value) from the donor’s estate.
If the trust has qualified under laws such as Internal Revenue Code section 501(c), donations to the trust may be deductible to an individual taxpayer or corporate donor.
Read more about this topic: Charitable Trust
Famous quotes related to united states:
“The United States never lost a war or won a conference.”
—Will Rogers (1879–1935)
“To the United States the Third World often takes the form of a black woman who has been made pregnant in a moment of passion and who shows up one day in the reception room on the forty-ninth floor threatening to make a scene. The lawyers pay the woman off; sometimes uniformed guards accompany her to the elevators.”
—Lewis H. Lapham (b. 1935)
“We now in the United States have more security guards for the rich than we have police services for the poor districts. If you’re looking for personal security, far better to move to the suburbs than to pay taxes in New York.”
—John Kenneth Galbraith (b. 1908)
“Some of the offers that have come to me would never have come if I had not been President. That means these people are trying to hire not Calvin Coolidge, but a former President of the United States. I can’t make that kind of use of the office.... I can’t do anything that might take away from the Presidency any of its dignity, or any of the faith people have in it.”
—Calvin Coolidge (1872–1933)
“The United States is just now the oldest country in the world, there always is an oldest country and she is it, it is she who is the mother of the twentieth century civilization. She began to feel herself as it just after the Civil War. And so it is a country the right age to have been born in and the wrong age to live in.”
—Gertrude Stein (1874–1946)