Charitable Remainder Inter Vivos Annuity Trust
Overview of this form
The Charitable Remainder Inter Vivos Annuity Trust is a legal document that establishes a trust designed to provide income to a designated individual for a specified period, after which the remaining assets are donated to a charitable organization. It differs from other types of charitable trusts in that it provides annuity payments and is created during the grantor's lifetime. This trust can be beneficial for individuals looking to support a charitable cause while also receiving income from their assets during their lifetime.
Form components explained
- Identification of the donor and trustee and the name of the trust.
- Details on the funding of the trust and assets included.
- Specification of annuity payments to the designated recipient and how these are calculated.
- Provisions for distributions to the charitable organization after the annuity period ends.
- Regulations preventing self-dealing and ensuring compliance with the Internal Revenue Code.
- Prohibitions on additional contributions after the initial transfer to the trust.
When to use this document
This form should be used when an individual wants to establish a charitable remainder annuity trust to benefit a loved one with regular payments during their lifetime and later support a charitable organization. It is ideal for those who wish to manage their assets effectively while ensuring that a portion is dedicated to charity after their death.
Who can use this document
- Individuals seeking to provide financial support to a family member or friend while also making a charitable contribution.
- Donors who have a significant amount of assets and wish to create a structured trust for tax benefits.
- People interested in a planned giving strategy that generates income during their lifetime.
Completing this form step by step
- Identify the parties involved: the donor, trustee, and recipient.
- Specify the property being transferred to the trust.
- Determine the annuity percentage to be paid to the recipient.
- State the charitable organization that will receive the trust assets after the annuity period.
- Sign and date the form, ensuring that all parties acknowledge it properly.
Is notarization required?
This form needs to be notarized to ensure legal validity. US Legal Forms provides secure online notarization powered by Notarize, allowing you to complete the process through a verified video call, available anytime.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Common mistakes
- Failing to properly identify the charitable organization, which can affect tax benefits.
- Not clearly defining the annuity payment calculations, leading to disputes later.
- Using incorrect valuations for the initial assets transferred to the trust.
Benefits of using this form online
- Convenient access to customizable legal forms tailored to individual needs.
- Instant download ensures that you can start the process immediately.
- Trusted templates reviewed by licensed attorneys for legal accuracy and compliance.
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FAQ
All charitable remainder trusts described in section 664 must file Form 5227. All pooled income funds described in section 642(c)(5) and all other trusts such as charitable lead trusts that meet the definition of a split-interest trust under section 4947(a)(2) must file Form 5227 unless the Exception next applies.
Currently, a trust is required to file income tax returns if, during a taxable year it has gross income of $600 or more, or any amount of taxable income.Because a charitable remainder trust is ordinarily tax-exempt, the trust will calculate net income at the trust level, but will pay no tax.
Cash. Publicly traded securities. Some types of closely held stock (Note that CRTs cannot hold S-Corp stock) Real estate. Certain other complex assets.
A charitable lead trust is an irrevocable trust designed to provide financial support to one or more charities for a period of time, with the remaining assets eventually going to family members or other beneficiaries. Charitable lead trusts are often considered to be the inverse of a charitable remainder trust.
Charitable lead trusts are often considered to be the inverse of a charitable remainder trust.A charitable remainder trust, in contrast, can provide a stream of income for family members for the term of the trust before the remaining assets are transferred to one or more charitable organization beneficiaries.
Charitable remainder annuity trusts (CRATs) distribute a fixed annuity amount each year, and additional contributions are not allowed. Charitable remainder unitrusts (CRUTs) distribute a fixed percentage based on the balance of the trust assets (revalued annually), and additional contributions can be made.
As a general rule, a charitable trust may last forever, unlike a private trust. In a private trust, the designated beneficiary is the proper person to enforce the trust. In a charitable trust, the state attorney general, who represents the public interest, is the proper person to enforce the trust.
CRTs are exempt from income tax. The CRT assumes the grantor's adjusted cost basis and holding period in the property. If the CRT sells appreciated property, neither the grantor nor the CRT will pay immediate income tax on the sales.
