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Using CLATs to support charitable causes AND reduce taxes

As an approach to reduce current income taxes, transfer wealth to family free of gift and estate taxes, and support charitable organizations with regular contributions, Charitable Lead Annuity Trusts (CLATs) offer many advantages.

A CLAT may be funded with either cash or property, and the individual establishing the CLAT may receive a current income tax deduction up to the full amount contributed depending on how it is structured. The deduction can be as much as to 30% of current year adjusted gross income depending on a number of factors. The CLAT then pays a pre-defined annual amount to charity over a specified number of years. The annual charitable contributions may start small and grow over the term of the CLAT. Remaining assets at the conclusion of the term are paid to the individual’s children or other beneficiaries without using gift or estate tax exemptions.

Individuals considering a CLAT should be sure to work with qualified professionals who are already familiar with the nuances of establishing  Charitable Lead Annuity Trusts. Additional information about CLATs is available at this link.


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John Bunge
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