Charitable Lead Trust CLT 2026 Calculator

A Charitable Lead Trust (CLT) pays an annual amount to charity for a term of years, then distributes the remaining principal to the grantor's family or other non-charitable beneficiaries. The structure flips the more familiar Charitable Remainder Trust — here the charity is in front, the family is at the back. CLTs are most powerful in low §7520-rate environments, where the actuarial value of the charitable lead interest can equal or exceed the trust value. Last updated 2026.

CLAT vs CLUT — Two Payout Structures

A Charitable Lead Annuity Trust (CLAT) pays a fixed dollar amount each year (e.g., $300,000), regardless of trust value. A Charitable Lead Unitrust (CLUT) pays a fixed percentage of trust value (e.g., 6%) revalued annually. CLATs are usually preferred for wealth transfer because they let growth above §7520 flow to family; CLUTs scale with markets and produce more for charity in up years.

Grantor CLAT vs Non-Grantor CLAT

A grantor CLAT gives the grantor a one-time upfront income-tax charitable deduction under IRC §170(f)(2)(B) for the present value of the charitable lead interest — but the grantor remains taxed on the trust's income each year. A non-grantor CLAT claims no upfront income-tax deduction; the trust itself deducts charitable distributions under IRC §642(c) each year, and the gift-tax deduction under IRC §2522 still applies to the lead interest at funding. The non-grantor version is the classic "zeroed-out" CLAT for estate freeze.

The Zeroed-Out CLAT

By setting the payout rate so the present value of the charity's lead interest equals the full trust value, the taxable gift to family is reduced to zero. Any growth inside the trust above the §7520 rate becomes a gift-tax-free transfer to family at term end. With §7520 at 5% and the trust earning 8%, a 20-year zeroed-out CLAT can transfer 30-60% of the original principal to family while costing zero gift-tax exemption.

Sources and References

This tool follows IRC §170(f)(2) (income-tax charitable deduction for split-interest trusts), IRC §2522(c)(2) (gift-tax charitable deduction for CLTs), IRC §642(c) (trust-level deduction for non-grantor CLATs), IRC §664 (parallel structure rules), and IRS published §7520 monthly rates. Always confirm current §7520 rate and consult a qualified estate-planning attorney.

Last updated May 2026. Sources cited in tool output.