What is a unitrust?

A unitrust is a type of irrevocable trust that provides a fixed percentage of the trust's assets to one or more beneficiaries. The percentage is determined at the time the trust is established and remains constant throughout the life of the trust.

The trust assets are managed by a trustee who invests the assets and distributes the income to the beneficiaries on a regular basis. The trust can be set up to last for a specific period of time or for the lifetime of the beneficiaries.

One of the benefits of a unitrust is that it provides a steady source of income for the beneficiaries. The fixed percentage ensures that the beneficiaries receive a proportionate share of the trust's income, regardless of fluctuations in the market.

Another advantage of a unitrust is that it can provide tax benefits for the donor. Donors can receive a charitable tax deduction for the value of the assets transferred to the trust and can reduce or eliminate capital gains taxes on appreciated assets.

In summary, a unitrust is a flexible estate planning tool that can provide income to beneficiaries while also providing tax benefits for the donor.