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.
Pennsylvania Inter Vivos Granter Charitable Lead Annuity Trust, also known as FLAT, is a legal tool that allows individuals to support charitable causes while potentially minimizing their estate tax liability. This type of trust is set up during the lifetime of the granter and involves transferring assets to the trust, which then makes regular payments to one or more charitable organizations for a specified period. The Pennsylvania Inter Vivos Granter FLAT is primarily designed to provide consistent income streams to charitable beneficiaries over a predetermined term. The granter retains the right to deduct the present value of the charitable payments made from their income tax during the year of establishing the trust. Meanwhile, the trust assets will be excluded from the granter's estate for tax purposes, potentially reducing estate taxes. There are several variations of Pennsylvania Inter Vivos Granter Charitable Lead Annuity Trust, including: 1. Term Certain FLAT: This type of trust ensures that all charitable payments are made for a specific term, regardless of trust performance or the death of the granter. Once the term ends, any remaining assets can be distributed back to the granter or to non-charitable beneficiaries. 2. Flip FLAT: In a Flip FLAT, the trust's payout terms "flip" if certain triggering events occur, such as a significant decrease in the trust's value. This type of trust offers flexibility to adapt to changing circumstances and helps ensure that charitable payments are made as intended. 3. TIMEOUT FLAT: A Net Income with Makeup Charitable Remainder Unit rust (TIMEOUT) is a variation of the FLAT. It allows for the potential growth of the trust assets by distributing a fixed percentage of the trust's annual value to charitable beneficiaries each year, while also providing for the potential accumulation of any remaining income for future distribution. This type of FLAT is popular among individuals who anticipate significant growth in their trust's assets. In conclusion, the Pennsylvania Inter Vivos Granter Charitable Lead Annuity Trust is a valuable estate planning tool that allows individuals to support charitable causes while potentially reducing their estate tax burden. By understanding the different variations of this trust, individuals can choose the one that best suits their financial goals and philanthropic aspirations.
