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Charitable & Philanthropic

Charitable Lead Annuity Trust (CLAT)

Zeroed-out CLAT: charity gets annual payments, heirs get remainder gift-tax-free.

Overview

Fund a CLAT with an appreciating asset. Trust pays a fixed annuity to charity for a term of years (e.g. 15–20). If IRS §7520 rate assumption is low, structure a 'zeroed-out' CLAT — PV of charity payments = full gift value → $0 taxable gift. Remainder (all appreciation above §7520 rate) passes to heirs gift/estate-tax-free. Massive wealth transfer engine in low-rate environments.

Best fit
UHNW estate-planning familiesFounders pre-liquidityAnyone with appreciating assets and heirs
Estimated impact
$1M–$50M+ transferred to heirs gift/estate-tax-free

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