Understanding Charitable Lead Annuity Trusts (CLATs): Passing on assets to beneficiaries tax-free

This video delves into Charitable Lead Annuity Trusts (CLATs), highlighting their function and key differences from other trusts like GRATS (Grantor Retained Annuity Trusts). CLATs allow you to make annuity payments to a charity for a specified term, after which the remaining assets can pass to your beneficiaries tax-free. We discuss the benefits, such as large upfront charitable deductions, reduced estate taxes, and how the Applicable Federal Rate (AFR) influences these trusts. We also discuss the differences between CLATs and Charitable Lead Unitrusts (CLUTs) and address common questions about these financial tools.

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00:00 Introduction to CLATs
00:39 Benefits of Setting Up a CLAT
00:51 Tax Planning with CLATs
01:09 Key Benefits Recap
01:42 Understanding Interest Rates for CLATs
02:18 Types of Charitable Trusts
02:47 Choosing Between CLATs and CLUTs