What does a Charitable Lead Annuity Trust (CLAT) provide?

A Charitable Lead Annuity Trust (CLAT) is designed to provide a fixed income stream to a charitable organization over a specified term, with the principal ultimately passing to non-charitable beneficiaries, such as family members, after that term ends. In a CLAT, the grantor makes contributions to the trust, which then pays a fixed annuity amount to charity for the duration of the trust.

This structure benefits the charity by ensuring they receive consistent funding over a predetermined period, which can be particularly useful for charities looking for stable, predictable income to support their operations or initiatives. After the annuity payments to the charity are completed, the remaining assets in the trust can be distributed to the grantor's beneficiaries, which ultimately can fulfill both charitable intent and family legacy planning.

The other options reflect different aspects of trust and estate planning but do not accurately capture the primary purpose or function of a CLAT, which centers around fixed income support for charitable causes.