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GiftLaw Pro Home   >  Chapter 3 - Deferred Gifts  >  3.10 Unitrust  >  3.10.4 Types of Unitrust Payouts  >  Basic Quiz

Basic Quiz - 3.10.4 Types of Unitrust Payouts

1. There are only two types of unitrust payouts: straight payout unitrusts and net income plus makeup unitrusts.
           
2. A standard or Type I unitrust is preferred by many donors and advisors because it has the flexibility to defer unitrust payments until a time when the donor needs the income.
           
3. A standard or Type I unitrust is an excellent choice if the donor plans on funding the trust with real property or other illiquid assets.
           
4. A net plus makeup unitrust is an excellent option for donors who desire charitable deductions now, but wish to defer taking income until a stated date or event occurs.
           
5. Prior to the adoption of the Uniform Principal and Income Act, capital gains were typically allocated to principal for trust accounting purposes.
           
6. With a net income plus makeup unitrust, pre-contribution gain may be paid out if there is no tier-one ordinary income earned in the current year.
           
7. A FLIP unitrust begins as a standard or Type I trust and then Flips to a net income plus makeup unitrust or Type II trust.
           
8. A FLIP unitrust's trigger event may be discretionary to the donor after the trust's creation.
           
9. One downside of the FLIP unitrust is that when the trust flips to a straight unitrust, the deficit account, if any, will be lost on the stated valuation date of the trust (usually January 1 of the FLIP year).
           
10. Once the trigger event has occurred, a FLIP unitrust will immediately become a standard unitrust on the day after the trigger event.