How does a CLT work? A CLT is an arrangement that permits a donor to direct that payments be distributed to a charity for a period of time, after which the assets in the trust are returned to either the donor (a grantor lead trust) or to other beneficiaries—typically children and/or grandchildren (a nongrantor lead trust).
What does the discount rate change mean to you? This steep plunge significantly affects (either negatively or positively) the tax deduction produced by various charitable vehicles. Prominent among the big winners is the charitable lead trust (CLT).
Why is the CLT more attractive right now? A CLT's income- or gift-tax deduction increases as the discount rate goes down, thereby increasing the leverage the gift provides: Now, a donor can pass more to beneficiaries at significantly reduced transfer-tax costs with a nongrantor lead trust or generate a higher income-tax deduction with a grantor lead trust.
What can you do? This is the first time since 2003 that the discount rate has been this low. That means right now is an excellent time to alert your wealthy donors about this golden opportunity!
What is the target market for a CLT? This gift vehicle is best marketed to (most attractive to) your high net-worth donors.
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