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The Optimized CLAT: A Compelling Income Tax Deduction Vehicle Hiding In Plain Sight

September 02, 2020
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In a year in which charities fear donations will be down, charitable lead annuity trusts (CLATs) encourage gifting to charities and provide generous wealth transfer benefits. 

By Jonathon M. Morrison, Dylan H. Metzner, and Christopher P. Siegle, as featured in Estate Planning

What if tax advisors and investment professionals had a charitable income tax deduction vehicle created and funded to eliminate up to 30% of a client’s taxable income? The charitable lead annuity trust (CLAT) has been available since 1969 to do just that. CLATs offer clients the chance to maximize the benefits of their charitable giving, enjoy the opportunity to make a difference to their community, and reap considerable financial rewards accruing to the benefit of themselves, or to beneficiaries of their legacy.

By leveraging the current all-time low 7520 rate and using the Optimized CLAT, charitably inclined clients have a unique opportunity to eliminate annual income taxes, provide for charity, and transfer enormous wealth, free of gift and estate taxes (and without any use of their lifetime exclusions).

It is these tax and economic benefits that give the Optimized CLAT the power to outperform nearly all other traditional investment vehicles. Read more about how this widely underutilized vehicle can be used to your benefit, including details on:

  • Maximizing grantor and family benefits
  • Deferring charitable annuity payments up to 30 years
  • Zeroing out the CLAT for gift tax purposes
  • Exemptions from estate tax
  • Changing beneficiaries
  • Differences between a CLAT and a qualified retirement account
  • Year-to-year funding
  • Considerations before you jump


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The Optimized CLAT


Co-author Dylan H. Metzner is a shareholder at Denver-based Jones & Keller, where he designs and executes advanced private wealth planning strategies for individuals and families worldwide. He can be reached at