Charitable Lead Annuity Trust

The Charitable Lead Annuity Trust, or CLAT, is an irrevocable trust that offers benefactors a way to contribute payments to a charitable trust, a donor-advised fund, or a foundation of the grantor’s choosing for a specific term of years or for the lifetime of the grantor, with the balance distributed to the grantor’s descendants or other beneficiaries at the end of the specified term. 

To Work for Good

Using the CLAT is a way for grantors to put their wealth to work in supporting the cause or charity to which they are committed, while they are living or earning with the remaining balance of the trust being distributed to their personal beneficiaries or descendants when the term of the charitable lead is concluded.

A CLAT offers a tax-efficient way to transfer wealth to your heirs, while benefitting your chosen charities during your life or the term you specify.

How the CLAT Works

Under the terms of a Charitable Lead Annuity Trust, the charity or “lead beneficiary” becomes recipient of fixed payments each year. The span of these payments can encompass the grantor’s lifetime or a specified number of years.

With or without that design of motivating one’s heirs, the CLAT makes active, charitable use of wealth, with tax benefits, during the life of the grantor or the specified term and still affords the opportunity to transfer the balance of the assets to one’s descendants or heirs when that term is concluded.

With Good Works in Mind

The satisfaction which clients report, from arranging a CLAT to benefit their charitable interests, and still bequeath wealth efficiently to their heirs, is one of the many values that cannot be measured simply in numbers. The practical benefits, too, are ingenious, and for many, unexpected. When one client discovered that, through a CLAT, she could donate annually to a Native American school to which she had long been committed and still substantially fund the college educations of her own grandchildren at the end of the specified term, she was surprised and satisfied that such a dual benefit could arise from her careful planning.