Charitable Lead Trusts Revisited

Who is an ideal candidate for a Charitable Lead Trust (CLT)? First and foremost, the person must be charitably-inclined. Another obvious factor is that the person has wealth. I mean wealthy from the standpoint that the person does not need the income from the property to be placed in the trust. What is an ideal asset for a CLT? An asset that will significantly appreciate in value. An asset that is liquid and/or produces enough income to cover the charitable annuity.

Use It or (Possibly) Lose It

Currently, the federal gift tax exclusion amount is $5,000,000. If Congress does nothing, which we know from recent years is a real possibility, the law sunsets on December 31, 2012 and the exclusion amount will drop to $1,000,000. If Congress does act, it is possible (maybe even likely) that the exclusion amount will be lower than $5,000,000. This means that the wealthy may have less than two years to gift significant wealth tax-free.

Automatic Extension of Time Shortened

The automatic extension of time to file a Form 1041 Fiduciary Income Tax Return was recently shortened from six months to five months by the IRS. The amendment to Treasury Reg. Section 1.6081-6T is effective as of June 24, 2011. Of course, the automatic extension to file the return does not extend the payment deadline.