Charitable Lead Annuity Trust Basic InformationIf you are confused when you are considering opening a trust you are certainly confused when you are trying to decide which type of trust you want to create. There are almost as many types of trusts available to use as there are personalities of the individuals who contribute to it. This means it takes some time to really decide which type of trust you want to do. One of your options is to look at a charitable lead annuity trust. This trust is a bit different from a typical charitable trust in that instead of the remainder of the funds in the trust being given to charity the original disbursements is given to a charity. This means that if you decide that you want 5% of the trust to be disbursed annually to the charity of your choice that each year you will have 5% disbursed. It also means that when all of the payments to the trust have been disbursed during the total term of the trust that all of the funds will be returned to either the donor, or can be given to anyone else that the original donor specifies.
You have to decide when you look at a charitable lead annuity trust whether you want to give a fixed amount, or a percentage of the trust as the yearly payments to the charity of your choice. Because the assets that are included in the charitable lead annuity trust are invested there is typically almost always some assets left to be returned once the trust terminates. The exact amount of the returned assets will vary depending upon how much is paid out as well as the number of charities that are receiving disbursements. This type of trust is similar to other charitable trusts in that they are not revocable; however, they differ because the remaining assets are returned to the donor. With other charitable trusts, the annuity payments are disbursed to the beneficiaries rather than to the charity and the remaining balance is given to the charity. A charitable lead annuity trust is different. Because it is still a form of charity trust there are still tax benefits that you can take full advantage of. In the world of trust accounts, a charitable lead annuity trust is not very common. If you are interested in setting this form of trust up you should ensure that the lawyer you select has experience with this particular form. Remember, a trust generally cannot be changed which can make it a very expensive mistake if something is mishandled. This is a time when a highly experienced lawyer is the best option and investment you can make. |