Charity Advisor Resource Newsletter - Volume 1.2 2009
Revenue Procedure 2007-45, Section 5.02(2)
Payment requirements. CLATs are not subject to any minimum or maximum payout
requirements. The governing instrument of a CLAT must provide for the payment to a
charitable organization of a fixed dollar amount or a fixed percentage of the initial net
fair market value of the assets transferred to the trust. Alternatively, the governing
instrument of a CLAT may provide for an annuity amount that is initially stated as a fixed
dollar or fixed percentage amount but increases during the annuity period, provided that
the value of the annuity amount is ascertainable at the time the trust is funded. The
annuity payments may be made in cash or in kind. If the trustee distributes appreciated
property in satisfaction of the required annuity payment, the trust will realize capital gain
on the assets distributed to satisfy part or all of the annuity payment and the trust will be
allowed a ¤ 642(c)(1) deduction for the realized capital gains. Rev. Rul. 83-75, 1983-1
C.B. 114.
Jonathan Ackerman, 2002 President of NCPG (now known as Partnership for Philanthropic Planning), represents donors and tax-exempt organizations on a national basis. His advice is often sought by charities in their creation and operation, especially with respect to contributions and other funding opportunities, as well as by families (and their advisors) who desire to integrate philanthropy into their estate plans.