3.10.4 Basic Quiz -- Types of Unitrust Payouts

There are only two types of unitrust payouts: straight payout unitrusts and net income plus makeup unitrusts.

True False

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.

True False

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.

True False

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.

True False

Prior to the adoption of the Uniform Principal and Income Act, capital gains were typically allocated to principal for trust accounting purposes.

True False

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.

True False

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.

True False

A FLIP unitrust's trigger event may be discretionary to the donor after the trust's creation.

True False

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).

True False

Once the trigger event has occurred, a FLIP unitrust will immediately become a standard unitrust on the day after the trigger event.