How do CLATs and CRATs work?
A Charitable Lead Annuity Trust (CLAT) pays a fixed annuity to one or more charities for a set term, and the remaining assets then pass to your heirs or other beneficiaries. A Charitable Remainder Annuity Trust (CRAT) works in reverse: it pays a fixed annuity to you or other beneficiaries, and the remaining assets go to charity. Both are set up with your attorney and are part of broader estate and tax planning. See Active Tax Advisory for more on trusts.