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.
Illinois Charitable Inter Vivos Lead Annuity Trust, also known as an IL CIT, is a legal instrument that enables individuals to make charitable donations while still retaining certain benefits during their lifetime. It falls under the broader category of Charitable Trusts, which help individuals support their preferred charities or causes in a tax-efficient manner. An "inter vivos" trust refers to a trust that is established during the granter's lifetime, as opposed to a trust created in a will or after death (testamentary trust). The IL CIT specifically designates a fixed percentage of the trust's assets to be donated annually to one or more charitable organizations for a predetermined period or, in some cases, for the granter's lifetime. Keywords: Illinois Charitable Inter Vivos Lead Annuity Trust, IL CIT, Charitable Trusts, inter vivos trust, charitable donations, tax-efficient, granter's lifetime, testamentary trust, fixed percentage, charitable organizations, predetermined period. Different types and variations of Illinois Charitable Inter Vivos Lead Annuity Trust include: 1. Non-Grantor Illinois Charitable Inter Vivos Lead Annuity Trust: In this type of CIT, the trust is considered a separate legal entity, and any income generated by the trust is taxable at the trust level. 2. Granter Illinois Charitable Inter Vivos Lead Annuity Trust: This variation classifies the trust as a granter trust, meaning the granter is responsible for paying taxes on the trust's income. However, the granter is eligible for income tax deductions for charitable contributions made through the trust. 3. Charitable Remainder Trust: While not specifically an Illinois CIT, a Charitable Remainder Trust is another type of charitable trust where the donor (granter) receives income during their lifetime, after which the assets pass to the designated charitable beneficiaries. 4. Charitable Lead Unit rust: Similar to the IL CIT, a Charitable Lead Unit rust (CLU) directs a fixed percentage of the trust's assets to charitable organizations for a specified period. However, the CLU pays a fluctuating annual amount to the charitable beneficiaries based on the trust's annual valuation, which may result in more significant donations during prosperous years. 5. Charitable Lead Annuity Trust: In contrast to the IL CIT, a Charitable Lead Annuity Trust (FLAT) provides a fixed dollar amount to charitable beneficiaries annually, regardless of the trust's performance. Overall, the Illinois Charitable Inter Vivos Lead Annuity Trust and its various types offer an effective strategy for individuals looking to support charitable causes while availing tax benefits and retaining certain benefits during their lifetime. It is advisable to consult with legal professionals or financial advisors experienced in trust administration to understand the intricacies and potential benefits of this type of trust.
