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.
The Virgin Islands Inter Vivos Granter Charitable Lead Annuity Trust (VILLA) is a legal instrument that allows individuals to combine their philanthropic goals with estate planning strategies. This trust can benefit both the philanthropist and charitable organizations by providing income streams to the chosen charities and potential tax savings for the granter. The VILLA is specifically designed for individuals who wish to transfer their assets and income to future generations while making a positive impact on the community. Key Features and Structure of the VILLA: 1. Granter: The creator and initial funder of the trust is known as the granter. They can make irrevocable contributions to the trust, which will later be distributed to beneficiaries and charitable organizations. 2. Charitable Lead Annuity Trust: The term "lead" signifies that the charitable beneficiaries receive the initial distributions from the trust. The annuity structure refers to the fixed annual payments made to the charitable beneficiaries for a predetermined period. 3. Income Streams: The VILLA generates income for the charitable beneficiaries by distributing a fixed annuity amount each year. This income can support various charitable endeavors, such as funding education programs, supporting medical research, or aiding humanitarian causes. 4. Granter's Beneficiaries: The granter can designate one or more beneficiaries, typically family members or loved ones, who will receive the remaining assets within the trust after the predetermined charitable period ends. These beneficiaries can benefit from tax advantages and potentially receive an inheritance without significant tax liabilities. Types of the Virgin Islands Inter Vivos Granter Charitable Lead Annuity Trust: 1. Charitable Lead Unit rust (CLUB): Instead of providing a fixed annuity payment, this type of trust distributes a fixed percentage of the trust's value annually to charitable organizations. The value of the annuity payment fluctuates based on the trust's value, potentially providing an added benefit if the trust's assets appreciate. 2. Charitable Lead Annuity Trust (FLAT): This type of trust provides a fixed annual annuity payment to charitable organizations for a predetermined period. It is ideal for individuals who want to ensure a stable and consistent income stream for their chosen charities. 3. Flip Charitable Lead Annuity Trust (Flip FLAT): This trust allows the granter to switch the primary beneficiaries from charitable organizations to non-charitable beneficiaries, like family members, at a predetermined triggering event. This feature provides flexibility for individual circumstances and goals. 4. Granter Retained Annuity Trust (GREAT): Though similar to the FLAT, a GREAT allows the granter to receive an annuity payment for a specified term before the remaining assets pass to the beneficiaries. This trust is primarily used for estate planning purposes, combining philanthropy with wealth transfer strategies. Overall, the Virgin Islands Inter Vivos Granter Charitable Lead Annuity Trust offers a powerful tool for individuals seeking to support charitable causes while maximizing their financial benefits. By utilizing different types of Class, individuals can tailor their estate plans to accommodate their specific goals and desires.
