In a charitable lead trust, the lifetime payments go to the charity and the remainder returns to the donor or to the donor's estate or other beneficiaries. A donor transfers property to the lead trust, which pays a percentage of the value of the trust assets, usually for a term of years, to the charity. Unlike a charitable remainder trust, a charitable lead annuity trust creates no income tax deduction to the donor, but the income earned in the trust is not attributed to donor. The trust itself is taxed according to trust rates. The trust receives an income tax deduction for the income paid to charity.
The California Charitable Inter Vivos Lead Annuity Trust, often referred to as a FLAT, is a type of charitable trust established during the lifetime of the donor (inter vivos) to benefit a charitable organization. This trust provides the donor with an opportunity to make a significant charitable gift while retaining an income stream for a specific period before transferring the remaining assets to the designated charity. Keywords: California Charitable Inter Vivos Lead Annuity Trust, FLAT, charitable trust, donor, charitable gift, income stream, designated charity. There are different types of California Charitable Inter Vivos Lead Annuity Trusts, including: 1. Fixed-Term FLAT: This type of trust provides for a fixed income stream to be paid to the charitable organization for a specified period, after which the remaining assets are transferred to the donor or other beneficiaries. 2. Net Income FLAT: With a net income FLAT, the annual income stream to the charitable organization is calculated based on the trust's net income in a given year. If the trust's income exceeds the set annuity amount, the excess income can be accumulated or distributed to the beneficiaries as specified in the trust. 3. Flip FLAT: A flip FLAT begins as a charitable lead trust and later "flips" into a standard non-charitable trust, typically benefiting the donor or his/her family. This allows the donor to receive potential tax benefits during the charitable lead phase while ultimately passing the assets to the desired non-charitable beneficiaries. 4. Granter FLAT: In a granter FLAT, the donor retains certain powers or benefits, such as the ability to substitute assets in the trust, which could disqualify the trust from receiving a charitable deduction. However, the income stream to the charity maintains its status as a qualified charitable deduction. 5. Non-Grantor FLAT: In contrast to a granter FLAT, a non-grantor FLAT does not provide the donor with any retained powers or benefits. Thus, it allows for a complete charitable deduction for income, gift, and estate tax purposes. These different types of California Charitable Inter Vivos Lead Annuity Trusts offer flexibility to donors, enabling them to customize their charitable giving strategy while simultaneously providing for their own income or the needs of their family or other beneficiaries. Each type of FLAT has unique considerations, benefits, and tax implications that should be carefully evaluated in consultation with legal and financial professionals.The California Charitable Inter Vivos Lead Annuity Trust, often referred to as a FLAT, is a type of charitable trust established during the lifetime of the donor (inter vivos) to benefit a charitable organization. This trust provides the donor with an opportunity to make a significant charitable gift while retaining an income stream for a specific period before transferring the remaining assets to the designated charity. Keywords: California Charitable Inter Vivos Lead Annuity Trust, FLAT, charitable trust, donor, charitable gift, income stream, designated charity. There are different types of California Charitable Inter Vivos Lead Annuity Trusts, including: 1. Fixed-Term FLAT: This type of trust provides for a fixed income stream to be paid to the charitable organization for a specified period, after which the remaining assets are transferred to the donor or other beneficiaries. 2. Net Income FLAT: With a net income FLAT, the annual income stream to the charitable organization is calculated based on the trust's net income in a given year. If the trust's income exceeds the set annuity amount, the excess income can be accumulated or distributed to the beneficiaries as specified in the trust. 3. Flip FLAT: A flip FLAT begins as a charitable lead trust and later "flips" into a standard non-charitable trust, typically benefiting the donor or his/her family. This allows the donor to receive potential tax benefits during the charitable lead phase while ultimately passing the assets to the desired non-charitable beneficiaries. 4. Granter FLAT: In a granter FLAT, the donor retains certain powers or benefits, such as the ability to substitute assets in the trust, which could disqualify the trust from receiving a charitable deduction. However, the income stream to the charity maintains its status as a qualified charitable deduction. 5. Non-Grantor FLAT: In contrast to a granter FLAT, a non-grantor FLAT does not provide the donor with any retained powers or benefits. Thus, it allows for a complete charitable deduction for income, gift, and estate tax purposes. These different types of California Charitable Inter Vivos Lead Annuity Trusts offer flexibility to donors, enabling them to customize their charitable giving strategy while simultaneously providing for their own income or the needs of their family or other beneficiaries. Each type of FLAT has unique considerations, benefits, and tax implications that should be carefully evaluated in consultation with legal and financial professionals.
