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.
A Michigan Inter Vivos Granter Charitable Lead Annuity Trust (FLAT) is a legal arrangement that can be utilized as an estate planning and charitable giving tool. This trust allows the granter to transfer assets into the trust during their lifetime, giving them control over the trust's terms and management. It provides a mechanism for the granter to support charitable causes while potentially reducing estate taxes. The Michigan Inter Vivos Granter FLAT operates by making annual payments to designated charitable organizations for a predefined period. These payments are fixed amounts known as annuity payments, which are determined at the trust's creation. The duration can be for a specific number of years or for the lifetime of one or more individuals. At the end of the trust term, any remaining assets (if any) are typically distributed to the beneficiaries specified by the granter, such as family members or loved ones. Due to its flexibility, there are various types of Michigan Inter Vivos Granter Charitable Lead Annuity Trusts to consider: 1. Charitable Lead Annuity Trust with Fixed Term: In this type, the trust provides annual payments to charitable organizations for a fixed period decided by the granter. Once the term ends, the remaining assets are distributed to the named beneficiaries. 2. Charitable Lead Annuity Trust with Measuring Life: Here, the trust makes annuity payments for the lifetime of one or more individuals specified by the granter. After the death of the measuring life/lives, the remaining assets pass to the beneficiaries. 3. Charitable Lead Annuity Trust with Flip Provisions: This type involves a change in the distribution of funds at some predetermined event. For example, if the trust assets are not performing well, the trust may "flip" the interest from charitable beneficiaries to non-charitable beneficiaries. 4. Charitable Lead Annuity Trust with Granter Retained Annuity Trust (GREAT) Characteristics: This variation combines features of a Charitable Lead Annuity Trust and a Granter Retained Annuity Trust. The granter retains an annuity payment during the term of the trust, and after the term ends, the remaining assets go to charitable beneficiaries. Michigan Inter Vivos Granter Charitable Lead Annuity Trusts provide a unique opportunity to support charitable causes while potentially minimizing estate taxes and ensuring the effective distribution of assets. It is essential to consult with legal and financial advisors to determine the most appropriate type that aligns with personal goals and circumstances.
