An iCLAT is much easier to explain, establish and administer because its concentrated focus is on income tax savings - not estate tax savings. This is a tremendous planning advantage that cannot be overstated. Additionally, an iCLAT is not only easier to understand by the client/donor, but also by the client/donor's financial planner, accountant and estate planning attorney. An iCLAT will not disrupt the donor's estate planning documents, nor does it generate any kind of taxable gift - which quickly addresses the most common questions of the client/donor's estate planning attorney. If an iCLAT will be funded with marketable securities or cash, then such assets can simply be held in a new iCLAT account held with the client/donor's current financial planner. Finally, the accountant's common tax questions can be quickly addressed because an iCLAT is a "grantor trust" and not a separate taxpayer. This means that an iCLAT will only require the preparation of an "informational" IRS Form 1041, along with an IRS Form 5227, which both need to be filed on an annual basis. Because it is easier to understand by all the client/donor's professional advisors, the iCLAT has fewer barriers to overcome in comparison to traditional charitable lead trusts. TAKE A LOOK AT SEVERAL EXAMPLES
Less Disruptive & Increased Planning Flexibility
The donor/client can serve as the sole trustee an iCLAT. This will provide the donor/client with a much greater level of retained control in comparison to traditional charitable lead trusts. This is because the retained control concerns of IRC §2036, which are present in traditional CLTs, are completely irrelevant to the iCLAT. This means that there are fewer restrictions imposed on the donor/client trustee during the administration of the iCLAT. In other words, there are fewer concerns during the administration of the iCLAT. As many attorneys, advisors and gift planners know very well, retained control is often a major concern of clients and donors before implementing any planned giving or estate planning strategy. Due to the inherent planning flexibility present with an iCLAT - this common "degree of retained control issue" is simply not an issue!
Sole Focus = Saving Income Taxes (not estate taxes)
Unlike traditional charitable lead trusts, an iCLAT has absolutely nothing to do with saving future estate taxes - and this is by design! Rather, an iCLAT is solely designed to save current income taxes - plain and simple. From a applicability perspective, this fact is so very important because income taxes impact exponentially more families than estate taxes. Currently, estate taxes only impact a very small number of high net worth families (the current U.S. estate tax unified credit exemption amount is now $11,400,000 per person/$22,8000,000 per married couple). This means that less than 0.1% of the U.S. population is currently impacted by estate taxes. That is why traditional wealth-transfer charitable lead trusts (CLTs) are only applicable to a very small class of people. Conversely, almost all Americans are impacted every single year by federal and state income taxes. As a result, saving current income taxes is almost always a higher priority to Americans (i.e. your clients and donors) than saving potential estate taxes in the future. Simply put, an iCLAT's sole focus on saving income taxes is why it is so much applicable than traditional wealth transfer CLTs. TAKE A LOOK AT SEVERAL EXAMPLES
Reduced Expense & Time
Quicker Implementation & Less Disruption to Client/Donor
Compared to traditional wealth transfer charitable lead trusts, the iCLAT has significantly fewer issues to discuss with the donor's trusted attorney, financial planner and/or accountant. Since the advice of one or more of these should always be sought and obtained prior to implementing any planning giving strategy (such as an iCLAT) the proper communication with these advisors often requires additional time and potential professional expenses. Because the iCLAT has a singular planning objective, saving current income taxes, all this time (and expense) is greatly reduced with an iCLAT! Typically, an iCLAT can be designed, signed and fully funded in just a few weeks!