The Internal Revenue Service has released two batches of guidance of interest to advisors in the charitable planning market.
The new revenue procedure documents provide annotated sample declarations of trust provisions and alternate provisions for “charitable lead annuity trusts,” or “CLATs.”
CLATs first make annuity payments to one or more charities, then make payments to recipients that are not charities.
The first revenue procedure, Revenue Procedure 2007-45, explains how to set up CLATs that are created while the donor is still alive.
Following the rules for “grantor and nongrantor inter vivos CLATs,” or CLATs created while a donor is alive, affects whether the gift of the inter vivos CLAT interest qualifies for a gift tax charitable deduction or an estate tax charitable deduction, IRS officials write in the revenue procedure.
The second revenue procedure, Revenue Procedure 2007-56, explains how to set up “testamentary CLATs, or CLATs that are created when an individual dies.