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.
Oklahoma Charitable Inter Vivos Lead Annuity Trust (FLAT) is a type of estate planning tool that allows individuals to donate a portion of their assets to a charitable because they care about while also receiving potential tax benefits. This trust structure is widely used by individuals in Oklahoma who are looking to support charitable organizations throughout their lifetime. A Charitable Inter Vivos Lead Annuity Trust is created during the lifetime of the benefactor and enables them to transfer assets, such as cash, stocks, or real estate, into the trust with the purpose of benefiting a chosen charitable organization. The benefactor retains a fixed income stream (annuity) for a specified period, typically measured by years or the benefactor's life. At the end of this period, whatever remaining assets are held in the trust pass on to the charity. This philanthropic vehicle offers several advantages, one being the potential reduction of gift and estate taxes. By funding a FLAT, individuals may remove assets from their taxable estate, reducing the overall tax liability at the time of their passing. Additionally, because the charitable organization receives the remaining trust assets, there may be additional tax benefits, such as income tax deductions, for the benefactor during the period of the trust. Different types of Oklahoma Charitable Inter Vivos Lead Annuity Trusts can be categorized based on their duration, payout structure, and beneficiaries. Common variations include: 1. Term FLAT: This type of trust allows the benefactor to retain an income stream for a predetermined term. At the end of the term, the remaining assets pass to the chosen charitable organization. 2. Granter FLAT: A granter FLAT enables the benefactor to receive an immediate income tax deduction at the time of funding the trust. However, the income generated by the trust is attributed back to the benefactor for tax purposes. 3. Flip FLAT: In a flip FLAT, the trust is initially structured as a non-charitable lead trust, allowing the benefactor to receive income for a predetermined period. After this period, the trust 'flips' into a charitable remainder trust, where the remaining assets pass to non-charitable beneficiaries, such as family members or heirs. Oklahoma Charitable Inter Vivos Lead Annuity Trust is a valuable estate planning tool that allows individuals to support charitable causes while potentially reducing their tax burden. It is essential to consult with legal and financial professionals to determine the most suitable type of FLAT based on individual circumstances and philanthropic goals.
