Charitable Lead Annuity Trust (CLAT)

Overview

The mirror image of a remainder trust: the charity receives a fixed annual payment for a set term, and whatever is left at the end passes to your heirs. Because the value of the charity's interest reduces the taxable gift to heirs, a CLAT can transfer appreciation to the next generation with little or no gift or estate tax — especially powerful when the IRS §7520 rate is low.

Best For

Families focused on tax-efficient wealth transfer
Donors who want to support a charity now while benefiting heirs later
High-net-worth givers planning in low-interest-rate environments

📊 Key Tax & Giving Advantage

Can pass post-funding appreciation to heirs free of gift and estate tax; a grantor CLAT can also produce a large upfront income-tax deduction.

Considerations

Irrevocable; heirs receive nothing until the charitable term ends
Best results depend on the trust outperforming the §7520 rate
Grantor vs. non-grantor structure changes the tax treatment significantly

Interested in Charitable Lead Annuity Trust (CLAT)?

Every philanthropic structure should be tailored to your assets, goals, and state law. Request a private consultation and we'll help you choose and establish the right vehicle.

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