Article on the Intermediary CLAT Alternative to the Residuary Estate Family Foundation Gift

Richard S. Franklin (McArthur Franklin PLLC) & Jennifer A. Birchfield Goode (Birchstone Moore LLC) recently published an article entitled, The Intermediary CLAT Alternative to the Residuary Estate Family Foundation Gift, 39 ACTEC Law Journal No. 3 (Winter 2013).  Provided below is an excerpt from the introduction:

A common plan among wealthy individuals is to leave the balance of his or her estate to charity, usually a private family foundation the individual established. While these transfers mitigate estate taxes, they may not eliminate all concerns or tax issues for the family, the family company, or the family foundation.

Rather than leaving the estate directly to the family foundation, this article explains, through a detailed example, the benefits of using an intermediary charitable lead annuity trust, which will pay the bequest to the family foundation over a number of years yet have the same federal estate tax benefit as a direct bequest.1 Rather than flooding the foundation with a large bequest that may overwhelm its existing operation, distributing the large charitable bequest over a period of years allows the family foundation time to grow its operation to match its larger endowment.