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.
South Dakota Inter Vivos Granter Charitable Lead Annuity Trust, commonly known as South Dakota FLAT, is a popular estate planning tool that combines charitable giving and the ability to pass on assets to beneficiaries in a tax-efficient manner. This type of trust allows individuals to contribute assets during their lifetime while earning regular annuity payments and providing support to charitable organizations. The South Dakota FLAT is governed by South Dakota laws and offers unique advantages due to the state's favorable trust and tax regulations. By establishing this trust, individuals can leverage the benefits of charitable giving and potentially reduce their estate tax burden while ensuring their intended beneficiaries receive assets in the future. Key features of the South Dakota Inter Vivos Granter Charitable Lead Annuity Trust include: 1. Inter Vivos Creation: The trust is created during the granter's lifetime, enabling them to see the impact of their charitable contributions and retain some control over the assets during that time. 2. Granter Retained Annuity: The granter receives annuity payments from the trust for a specified term, typically ranging from 10 to 20 years. These payments are fixed and predetermined at the trust's inception. 3. Charitable Lead: A portion of the annuity payments is directed to one or more charitable organizations chosen by the granter. This allows for meaningful philanthropic support while potentially providing a tax deduction based on the charitable contributions made. 4. Tax Advantages: By utilizing the South Dakota FLAT, the granter can potentially reduce their taxable estate, as the assets placed in the trust are transferred out of their estate. Additionally, any growth on those assets during the trust's term is also excluded from the granter's taxable estate. There are different variations of South Dakota Inter Vivos Granter Charitable Lead Annuity Trust, including: 1. Charitable Lead Unit rust (CLUB): Instead of fixed annuity payments, the CLUB distributes a fixed percentage of the trust's value each year to the charitable organizations chosen by the granter. The payout fluctuates based on the trust's value, potentially offering more significant tax benefits. 2. Charitable Lead Annuity Trust (FLAT): This variation provides fixed annuity payments to the granter, similar to a traditional FLAT. The granter's chosen charitable organizations receive the remaining trust assets at the end of the specified term. In conclusion, the South Dakota Inter Vivos Granter Charitable Lead Annuity Trust is a versatile estate planning strategy that allows individuals to support charitable causes while minimizing estate taxes and providing for their beneficiaries. Whether one chooses the CLUB or FLAT variation, this trust can be a powerful tool to achieve philanthropic goals and preserve wealth for future generations.
