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.
Indiana Charitable Inter Vivos Lead Annuity Trust, commonly known as Indiana Charitable Lead Trust, is a legal arrangement used for estate planning and charitable giving purposes. It allows individuals to transfer assets or funds to a trust while retaining an income interest for a specified period or for life. The trust's income is then distributed to charitable organizations as predetermined by the granter. By creating an Indiana Charitable Inter Vivos Lead Annuity Trust, individuals can enjoy several benefits. Firstly, they have the satisfaction of supporting their preferred charitable causes during their lifetime. Additionally, they can apply for a charitable deduction as a result of their contributions, reducing their income tax liability. This type of trust also helps minimize estate taxes for their beneficiaries. There are several variations of Indiana Charitable Inter Vivos Lead Annuity Trusts, catering to specific preferences and goals of the granter. These include: 1. Charitable Inter Vivos Lead Unit rust: This trust distributes a fixed percentage of the trust's value, which is revalued annually, to charitable organizations. The income amount varies depending on the performance of the trust's assets. 2. Charitable Inter Vivos Lead Annuity Trust: This trust provides a fixed dollar amount of income, which remains constant throughout the trust's term. The assets within the trust are not revalued annually. 3. Charitable Inter Vivos Lead Flip Trust: This trust begins by distributing income to non-charitable beneficiaries for a specified period. After that period, it "flips" to become a charitable trust, with the income directed towards charities chosen by the granter. 4. Charitable Inter Vivos Lead Granter Trust: In this type of trust, the granter retains certain income tax responsibilities, allowing for potential tax benefits. The trust's income is paid to charitable organizations. 5. Charitable Inter Vivos Lead Net Income with Makeup Trust: This trust provides for the distribution of net income with a provision to make up any shortfalls in income in future years. The full income must be distributed to charitable organizations during the trust term. Indiana Charitable Inter Vivos Lead Annuity Trusts grant individuals the opportunity to make a lasting impact on their communities while enjoying the various tax advantages associated with charitable giving. These trusts can be customized to align with individual goals and preferences, making them a valuable tool in charitable estate planning strategies.
