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 Colorado Charitable Inter Vivos Lead Annuity Trust, commonly referred to as FLAT, is a type of charitable trust established by individuals who wish to provide financial support to charitable organizations while also benefiting their chosen beneficiaries. It is an irrevocable trust that allows the granter to donate assets to a charitable cause during their lifetime, while retaining an annuity income from the trust for a specified period of time. Keywords: Colorado Charitable Inter Vivos Lead Annuity Trust, FLAT, charitable trust, irrevocable trust, financial support, charitable organizations, beneficiaries, annuity income. There are two primary types of Colorado Charitable Inter Vivos Lead Annuity Trusts: 1. Charitable Lead Annuity Trust (FLAT): This type of FLAT provides a fixed annuity payment to the chosen charitable organization(s) for a set term, typically for a specified number of years. After the term ends, the remaining trust assets (if any) are transferred to the beneficiaries designated by the granter. By utilizing a FLAT, the granter can support charitable causes during their lifetime while potentially reducing their estate tax liability. 2. Charitable Remainder Annuity Trust (CAT): Though not strictly a Colorado-specific trust, the CAT is related to the concept of the FLAT. Instead of providing an annuity payment to charitable organizations first, the CAT allows the granter or their chosen beneficiaries to receive an annuity income from the trust for a specified term or their lifetime. After this period or upon the death of the income beneficiaries, the remaining assets are then distributed to the designated charitable organization(s). The CAT offers potential income tax deductions and estate tax benefits to the granter. These trusts offer a unique opportunity for individuals in Colorado to support charitable causes, reduce estate tax liability, and establish a lasting legacy of giving. The specific terms, conditions, and requirements of Colorado Charitable Inter Vivos Lead Annuity Trusts may vary, and seeking legal advice from an experienced estate planning attorney is highly recommended.
