Advanced planning · Module 1 of 12
CLAT Simulator
Charitable Lead Annuity Trust valued under IRC §7520 with IRS Mortality Table 2010CM. Solve for zero-out (Walton CLAT, T.C. 115 No. 41) so the taxable gift to heirs is $0 and any return above 5.20% passes transfer-tax-free.
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CLAT — Pre-engagement disclosure
This tool produces ESTIMATES for educational and pre-engagement planning use only. Outputs do NOT constitute legal, tax, or investment advice and are not a 'covered opinion' under Treasury Circular 230. Engage a licensed estate-planning attorney and CPA before implementing any strategy modeled here.
Audit triggers / anti-abuse risks
- Self-dealing (§ 4941): grantor / disqualified person cannot benefit from CLAT assets during the charitable term.
- Excess business holdings (§ 4943) and jeopardy investments (§ 4944) apply to non-grantor CLATs via § 4947(a)(2).
- Backloaded ('shark fin') CLATs receive heightened IRS scrutiny — escalation schedule must be drafted per Reg. § 1.664-2(a)(1)(i)(b).
- Grantor CLAT loses deduction if grantor dies during term and trust is includible in gross estate (§ 2036).
IRC § 170(f)(2)(B)
IRC § 2522(c)(2)
Reg. § 25.2522(c)-3
Reg. § 1.170A-6
Rev. Proc. 2007-45
Walton v. Comm'r, 115 T.C. 589
Inputs
Sets annuity so charitable deduction = FMV → $0 taxable gift.
Auditable valuation
Table 2010CM · Reg. § 25.2522(c)-3
Annuity factor12.253558
Annuity used / yr$408,045
Charitable deduction (PV of lead)$5,000,000
Deduction as % of FMV100.00%
Taxable gift to heirs (PV remainder)$0
Term length (yrs, projection)20
Projected corpus to heirs$4,631,857
Tax-free wealth transfer$4,631,857
- Annuity factor from Table B at 5.20%.
- Zero-out CLAT: solved annuity = FMV / annuity factor = $5,000,000 / 12.2536 = $408044.74/yr.
- All income produced inside a non-grantor CLAT is taxable at trust rates (§ 641); structure investment policy accordingly.
Saved presets
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Year-by-year projection
| Yr | Begin | Growth | Annuity paid | End |
|---|---|---|---|---|
| 1 | $5,000,000 | +$400,000 | −$408,045 | $4,991,955 |
| 2 | $4,991,955 | +$399,356 | −$408,045 | $4,983,267 |
| 3 | $4,983,267 | +$398,661 | −$408,045 | $4,973,884 |
| 4 | $4,973,884 | +$397,911 | −$408,045 | $4,963,749 |
| 5 | $4,963,749 | +$397,100 | −$408,045 | $4,952,805 |
| 6 | $4,952,805 | +$396,224 | −$408,045 | $4,940,984 |
| 7 | $4,940,984 | +$395,279 | −$408,045 | $4,928,218 |
| 8 | $4,928,218 | +$394,257 | −$408,045 | $4,914,431 |
| 9 | $4,914,431 | +$393,154 | −$408,045 | $4,899,541 |
| 10 | $4,899,541 | +$391,963 | −$408,045 | $4,883,459 |
| 11 | $4,883,459 | +$390,677 | −$408,045 | $4,866,091 |
| 12 | $4,866,091 | +$389,287 | −$408,045 | $4,847,334 |
| 13 | $4,847,334 | +$387,787 | −$408,045 | $4,827,076 |
| 14 | $4,827,076 | +$386,166 | −$408,045 | $4,805,197 |
| 15 | $4,805,197 | +$384,416 | −$408,045 | $4,781,568 |
| 16 | $4,781,568 | +$382,525 | −$408,045 | $4,756,049 |
| 17 | $4,756,049 | +$380,484 | −$408,045 | $4,728,488 |
| 18 | $4,728,488 | +$378,279 | −$408,045 | $4,698,722 |
| 19 | $4,698,722 | +$375,898 | −$408,045 | $4,666,575 |
| 20 | $4,666,575 | +$373,326 | −$408,045 | $4,631,857 |