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.
Texas Inter Vivos Granter Charitable Lead Annuity Trust (Texas IOC LAT) is a legal instrument that allows individuals to support charitable organizations while retaining some level of control over their assets during their lifetime. It is a specific type of trust that provides income streams for charities of the granter's choice, known as lead beneficiaries, for a fixed period of time. In this trust arrangement, the granter transfers assets, such as cash, real estate, or securities, into the trust, which then pays a fixed annuity amount each year to the designated charitable organizations. The annuity payments are made for a predetermined period, which can be a certain number of years or the lifetime of the granter. What sets the Texas IOC LAT apart from other charitable trusts is that it is considered an "Inter Vivos" trust, meaning it is established during the granter's lifetime. This allows the granter to witness the impact of their charitable contributions and actively engage with various philanthropic causes. Additionally, as it is a granter trust, the granter retains certain control and benefits from the trust assets during their lifetime. There are primarily two types of Texas Inter Vivos Granter Charitable Lead Annuity Trusts: 1. Charitable Lead Annuity Trust (FLAT): In this version, the fixed annuity payments to charitable beneficiaries remain constant throughout the term of the trust. The amount of the annuity is determined when the trust is established and does not fluctuate with changes in the trust's value. However, the trust assets have the potential to grow and generate additional income that can benefit the granter or other non-charitable beneficiaries after the trust term expires. 2. Charitable Lead Unit rust (CLUB): Unlike the FLAT, the CLUB pays a fixed percentage of the trust's value each year as an annuity to the charitable beneficiaries. As the trust value fluctuates, the annuity payment will also vary. If the trust value increases, the annuity payments will grow, and if the value decreases, the payments will decrease as well. The remainder, if any, can be distributed to non-charitable beneficiaries, such as family members or other individuals, after the trust term ends. By utilizing a Texas Inter Vivos Granter Charitable Lead Annuity Trust, individuals can support charitable causes close to their hearts while potentially reducing their taxable estate and passing on wealth to future generations. It offers a flexible and effective vehicle for philanthropy, allowing individuals to make a lasting impact on the community they care about.
