A Grantor Charitable Lead Annuity Trust (CLAT) is an irrevocable split-interest trust that provides for a specified amount to be paid to one or more charitable beneficiaries during the term of the trust. The principal remaining in the trust at the end of the term is paid over to, or held in a continuing trust for, a non-charitable beneficiary or beneficiaries identified in the trust. If the terms of a CLAT created during the donor's life satisfy the applicable statutory and regulatory requirements, a gift of the charitable lead annuity interest will qualify for the gift tax charitable deduction under § 2522(c)(2)(B) and/or the estate tax charitable deduction under § 2055(e)(2)(B). In certain cases, the gift of the annuity interest may also qualify for the income tax charitable deduction under § 170(a). The value of the remainder interest is a taxable gift by the donor at the time of the donor's contribution to the trust.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
The District of Columbia Inter Vivos Granter Charitable Lead Annuity Trust, commonly known as the DC Granter FLAT, is a type of charitable trust established by a resident of the District of Columbia. This estate planning tool offers several benefits for individuals who wish to support charitable organizations while also minimizing their tax liability. In a DC Granter FLAT, the granter transfers assets, such as cash, stocks, real estate, or other property, to the trust during their lifetime (inter vivos). The trust is irrevocable, meaning that once the assets are transferred, the granter cannot retrieve them. There are two main types of DC Granter Class: "Charitable Lead Annuity Trust" and "Charitable Lead Unit rust." Both structures have slightly different features and can be tailored to meet specific needs. 1. Charitable Lead Annuity Trust (FLAT): In this arrangement, the trustee distributes a fixed annual amount, known as the annuity payment, to one or more charitable organizations for a predetermined term. The payment can be a fixed dollar amount or a percentage of the initial trust value. At the end of the term, any remaining assets in the FLAT pass to non-charitable beneficiaries, such as family members or other designated individuals. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, the CLUB distributes a fixed percentage of the trust assets valued annually. This means that if the trust's value increases, the annuity payment will grow accordingly. Similarly, if the trust value decreases, the distribution amount decreases as well. At the end of the term, any remaining assets pass to the non-charitable beneficiaries. The primary advantage of creating a DC Granter FLAT is the ability to generate a charitable income tax deduction for the present value of the annuity payments made to charitable organizations. By donating to these organizations, the granter can support causes they care about while potentially reducing their taxable income. Furthermore, a DC Granter FLAT allows the granter to transfer assets to beneficiaries at a reduced transfer tax cost, such as estate or gift tax. The value of the gift to non-charitable beneficiaries is determined by subtracting the present value of the annuity payments made to charities from the initial trust value. In summary, the District of Columbia Inter Vivos Granter Charitable Lead Annuity Trust (DC Granter FLAT) is an estate planning instrument that enables residents of the District of Columbia to support charitable organizations, receive potential tax benefits, and transfer assets to non-charitable beneficiaries. By establishing either a Charitable Lead Annuity Trust or a Charitable Lead Unit rust, individuals can customize their charitable giving strategy to align with their financial goals and philanthropic aspirations.The District of Columbia Inter Vivos Granter Charitable Lead Annuity Trust, commonly known as the DC Granter FLAT, is a type of charitable trust established by a resident of the District of Columbia. This estate planning tool offers several benefits for individuals who wish to support charitable organizations while also minimizing their tax liability. In a DC Granter FLAT, the granter transfers assets, such as cash, stocks, real estate, or other property, to the trust during their lifetime (inter vivos). The trust is irrevocable, meaning that once the assets are transferred, the granter cannot retrieve them. There are two main types of DC Granter Class: "Charitable Lead Annuity Trust" and "Charitable Lead Unit rust." Both structures have slightly different features and can be tailored to meet specific needs. 1. Charitable Lead Annuity Trust (FLAT): In this arrangement, the trustee distributes a fixed annual amount, known as the annuity payment, to one or more charitable organizations for a predetermined term. The payment can be a fixed dollar amount or a percentage of the initial trust value. At the end of the term, any remaining assets in the FLAT pass to non-charitable beneficiaries, such as family members or other designated individuals. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, the CLUB distributes a fixed percentage of the trust assets valued annually. This means that if the trust's value increases, the annuity payment will grow accordingly. Similarly, if the trust value decreases, the distribution amount decreases as well. At the end of the term, any remaining assets pass to the non-charitable beneficiaries. The primary advantage of creating a DC Granter FLAT is the ability to generate a charitable income tax deduction for the present value of the annuity payments made to charitable organizations. By donating to these organizations, the granter can support causes they care about while potentially reducing their taxable income. Furthermore, a DC Granter FLAT allows the granter to transfer assets to beneficiaries at a reduced transfer tax cost, such as estate or gift tax. The value of the gift to non-charitable beneficiaries is determined by subtracting the present value of the annuity payments made to charities from the initial trust value. In summary, the District of Columbia Inter Vivos Granter Charitable Lead Annuity Trust (DC Granter FLAT) is an estate planning instrument that enables residents of the District of Columbia to support charitable organizations, receive potential tax benefits, and transfer assets to non-charitable beneficiaries. By establishing either a Charitable Lead Annuity Trust or a Charitable Lead Unit rust, individuals can customize their charitable giving strategy to align with their financial goals and philanthropic aspirations.
