iCLAT Essentials:
The "What" "How" "When" & "Why" of iCLATs
An "iCLAT" is simply a trust which makes annual distributions to one or more charities for a specified term of years and thereafter distributes the remaining trust assets back to the grantor (i.e. the client/donor who created the iCLAT). For legal and IRS purposes, an iCLAT is known as a "reversionary" charitable lead annuity trust, which is treated as a "grantor trust" for federal income tax purposes. Importantly, an iCLAT has nothing to do with saving estate taxes, or estate planning for that matter. Think of an iCLAT as an "Income Tax Savings CLAT"
HOW does an iCLAT generate so much IMMEDIATE TAX SAVINGS?
iCLATs work best for a person who regularly gives at least $10,000 per year to one or more charities (including their place of worship)
AND EITHER:
(1) has a sudden current year increase in "ordinary income" of $250,000 or more;
OR
(2) has a high current level of income that is expected to end within the next two years from retirement, the end of a lucrative contract, or other reasons.
The IMMEDIATE YEAR 1 charitable tax deduction generated by an iCLAT is equal to the "present value" of its annual payments to charity - using the IRS §7520 interest rate, which is released each month. Since the IRS §7520 interest rate continues to remain at all-time historic lows (0.6% for February 2021), the resulting year 1 charitable tax deductions from iCLATs have never been greater than they are right now! Use the iCLAT Calculator Tool to instantly determine the IMMEDIATE income tax deduction that a particular iCLAT can generate for you, your donor, or your client.
The IMMEDIATE YEAR 1 charitable tax deduction generated by an iCLAT is equal to the "present value" of its annual payments to charity - using the IRS §7520 interest rate, which is released each month. Since the IRS §7520 interest rate continues to remain at all-time historic lows (0.6% for February 2021), the resulting year 1 charitable tax deductions from iCLATs have never been greater than they are right now! Use the iCLAT Calculator Tool to instantly determine the IMMEDIATE income tax deduction that a particular iCLAT can generate for you, your donor, or your client.