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Gonnella & Majors, PC

Charitable Lead Trust

The charitable lead trust (CLT) is an irrevocable trust in which payments are made to a
qualified charitable organization or organizations for a number of years or for a period
measured by the life or lives of an individual or individuals.  At the termination of the trust
term, the assets pass to non-charitable beneficiaries.  Those non-charitable beneficiaries
may be the Grantor (Trustmaker) of the trust, other family members, or some other private
purpose.

Charitable lead trusts may be created during life, and when created during life are often
used as a technique of give away an asset at a reduced gift tax valuation.  Testamentary
charitable lead trusts (TCLAT) are created upon death, and are generally used to greatly
reduce the value of an asset for estate tax calculations, substantially reducing or eliminating
estate taxation.  

Charitable lead trusts may also be annuity trusts (CLAT) or unitrusts (CLUT).  
However, if an individual is anticipating allocating the generation skipping transfer tax (GST)
exemption to a charitable lead trust, the inclusion ratio of a charitable lead annuity trust
cannot be determined prior to the termination of the charitable interest.  Thus the amount of
the GST exemption allocated to the trust must be increased by an interest factor and
applied to the value of the trust assets upon the termination of the annuity interest.  

The Benefits of a CLAT

The major benefits of a CLAT are as follows:

  1. For our clients who a philanthropically inclined, the CLAT creates an income stream to
    a charity or charities for a term of years.
  2. The income and principal within the CLAT are protected from the claims of creditors.
  3. At the termination of the term of years of the CLAT, the grantor’s family will receive
    the assets undiminished by estate taxation.
GONNELLA & MAJORS, PC
Attorneys and Counselors at Law
Gonnella & Majors, PC ▪ 575 South Willow Street ▪ P.O. Box 1226 ▪ Jackson, WY ▪ 83001
Phone (307) 733-5890 ▪ Facsimile (307) 734-0544 ▪ www.wyomingestatelaw.com


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The Wyoming State Bar does not certify any lawyer as a specialist or expert.  Anyone considering a lawyer
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