Glossary of Terms beginning with U

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Acronym for Ultra High Net Worth Individuals.

Undivided Partial Interest

A great way for a donor to make a significant gift in a very simple manner.  Example: the donor is selling his second home in Vail, CO.  The home has no liens or mortgages and because it has been owned for many years it has enjoyed a huge increase in value. By selling the property the owner is going to pay a significant amount of capital gains tax. And, if the owner is inclinded to make a gift to a charity when the property sells it would be a much greater advantage to the owner if he would gift the charity an 'undivided partial interest' in the property before it is sold. If the owner sells and then makes a gift, he will have already paid his capital gains liability. With a gift of an undivided partial interest he will receive the same tax deduction (the full amount of the gift) PLUS they do not pay capital gains on the interest portion they give the charity.


A process by which shares of a commingled fund such as Pooled Income Fund (PIF) or Gift Annuity (GA) are assigned to a beneficiary based on the proportion of their gift to the total fund.


As in “Charitable Remainder Unitrust” - Under Code Section 664 (d) (2) and the regulations thereunder, there are four (4) variations of the Unitrust: 1) “Standard” Unitrustdonor irrevocably transfers money, securities or property to a separately invested trust with one or more initial individual beneficiaries and a charitable remainderman. The trust makes payments to the named individual beneficiaries at least annually in the amount equal to a fixed percentage (not less than five percent) of the net fair market value of the trust assets determined once each year. The donor may designate himself and/or other beneficiaries to receive these payments for life so long as the designated beneficiaries are alive at the time the trust is created. Alternatively the trust instrument may provide for unitrust payment to be made for a term of years not to exceed twenty. At the expiration of all income interests the assets are distributed to the charitable organization(s). 2) “Net Income” Unitrust – the same as a “standard” unitrust except the payments to the beneficiary are limited to the lesser of the net income of the trust and the unitrust percentage amount stated in the trust agreement. 3) “Net-Plus-Makeup” Unitrust – Administered as a net income unitrust, except that payments may exceed the state unitrust percentage amount up to, but not exceeding, the amount required to make up any accumulated deficiencies from prior years (years in which the trust’s net income was less than the stated percentage amount). 4) In a "flip CRUT", the donor establishes a net income CRUT, typically with illiquid assets. After a specific future event, such as sale of the assets, death, or a particular attained age of the donor, the trust is converted to a standard CRUT, paying out a fixed percentage distribution of market value of the trust assets, until the trust terminates.

Universal Life Insurance

See "Permanent Life Insurance".

Unrealized Capital Gain

The difference between the current fair market value of some property and the original cost basis. The gain is not realized until the property is sold.

Unrelated Business Taxable Income Rules

Rules that govern the taxability of income generated from a trade or business activity unrelated to the primary purpose for which the charity gained its tax-exempt status. Recent law makes UBTI a significant issue when creating charitable trusts. For example, a coin operated washing machine in an apartment building generates UBTI. It would not be unusual if UBTI would generate a 100% tax.


Unrestricted contributions may be spent at the discretion of the donee.