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GiftLaw Pro Home   >  Chapter 1 - Taxation and Giving  >  1.4 Generation-Skipping Tax Deductions  >  1.4.5 Lead Unitrust GSTT  >  Basic Quiz

Basic Quiz - 1.4.5 Lead Unitrust GSTT

1. Charitable lead trusts are excellent vehicles to benefit grandchildren while minimizing transfer taxes.
           
2. With a charitable lead unitrust (CLUT), the applicable fraction (and therefore the inclusion ratio) is computed at the termination of the trust.
           
3. If the trust return is greater than the trust payout, a charitable lead unitrust (CLUT) will distribute more value to family than a charitable lead annuity trust (CLAT).
           
4. With a CLAT, the GSTT applicable fraction (and therefore the inclusion ratio) is computed at the creation of the trust.
           
5. The allocation of GSTT exemption to a CLAT is a straightforward process at the creation of the trust.
           
6. A charitable lead trust (CLT) for grandchildren (or children) gives an example of a taxable distribution.
           
7. A taxable termination only occurs when a trust loses its tax-exempt status.
           
8. In the case of a taxable termination, the trustee shall pay the GSTT due.
           
9. A charitable lead trust produces the highest charitable deduction when used in conjunction with the highest applicable federal rate (AFR or rate of the month).
           
10. An excellent way to get a "double discount" is to combine a FLP or LLC with a charitable lead trust.