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.
A South Carolina Inter Vivos Granter Charitable Lead Annuity Trust (SC ICCAT) is a trust that allows individuals to both support charitable causes and receive specific tax benefits. This type of trust involves transferring assets into a trust, where the trust collects income for a specified period of time and then distributes the remaining assets to a chosen charitable organization. The SC ICCAT is established by a granter, who transfers assets to the trust, designating a specific term during which the trust will make annuity payments to a charitable organization of their choice. The granter retains the ability to make additional contributions to the trust during its term. The annuity payments made to the charitable organization are calculated based on a fixed percentage of the initial value of the trust assets at its inception. This percentage is determined by the granter and remains constant throughout the trust's term. The charitable organization receives these annuity payments annually for the specified term. This type of trust provides several benefits. Firstly, it allows the granter to support charitable causes that they are passionate about during their lifetime. Additionally, the granter may receive a charitable income tax deduction for the present value of the annuity payments made to the charitable organization. Furthermore, the SC ICCAT offers potential estate tax benefits. As the assets in the trust are distributed to the charitable organization at the end of the trust's term, any appreciation in the trust's value during its term will not be subject to estate tax. Moreover, if the granter chooses to fund the trust with estate tax-exempt assets, this can help reduce their taxable estate. It is essential to note that there are variations of the South Carolina Inter Vivos Granter Charitable Lead Annuity Trust, such as the Non-Grantor Charitable Lead Annuity Trust (NCC LAT) and the Granter Retained Annuity Trust (GREAT). These types differ in terms of whether the granter retains certain rights or if the trust is solely for charitable purposes. Each type of trust has its distinct advantages and considerations, which should be thoroughly discussed with legal and financial professionals to determine the most suitable option based on individual circumstances. In conclusion, the South Carolina Inter Vivos Granter Charitable Lead Annuity Trust is a powerful tool for individuals seeking to support charitable causes while potentially receiving tax benefits. It allows the granter to make significant contributions during their lifetime while ensuring the designated charitable organization receives annual annuity payments. By exploring the various types of trusts available, individuals can find the most appropriate structure to align with their philanthropic goals and financial planning strategies.
