What Are The Advantages of a Non-Grantor CLT?
For people who have significant assets, a CLT provides gift and estate tax relief: • You receive a charitable gift tax deduction for the present value of the annual trust payments to the charity. The amount of this gift tax deduction is typically a large percentage of the total assets contributed to a CLT, leaving only a small portion of the gift amount subject to the gift tax. • Because the gift tax deduction and the amount subject to gift tax is determined at the time the assets are contributed to the CLT, any appreciation of the assets that takes place during the term of the trust is not subject to additional gift or estate tax. As a result, the amount that you ultimately transfer to your heirs may be much larger than the amount upon which the gift tax is imposed. • None of the income earned by a CLT is taxable to the grantor; therefore, the grantor also does not receive a charitable income tax deduction. In effect, this results in a reduction of your taxable income over the trust t
