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Important Reminders: QCDs and CLATs

In today’s market conditions, we want to highlight the unique importance of Qualified Charitable Distributions (QCDs) and Charitable Lead Annuity Trusts (CLATs).

Given the critical needs facing our community right now, the team at the FM Area Foundation wants to reiterate the value of these two planning tools. Please contact us if you have any questions about how these charitable giving techniques can help you and your clients immediately support people in need. 

In the case of Charitable Lead Annuity Trusts, some experts are heralding a “golden age of CLATs” because of the convergence of historically low interest rates and depressed asset values. The timing may never be better for your clients to use a CLAT to create an income stream to charities, thereby satisfying their current goals for amping up philanthropy in this period of extreme need, and simultaneously establish a future gift to heirs with the trust’s remainder.  

Don’t overlook Qualified Charitable Distributions, either, as a way to meet the urgent needs of the charities your clients want to support. The Coronavirus Aid, Relief, and Economic Security (CARES) Act waives Required Minimum Distributions for most taxpayers. The provision includes not only distributions from 401(k)s and IRAs, but also defined benefit pension plans and 457 plans. Taxpayers who have reached 70½ years of age still can take advantage of the Qualified Charitable Distribution, enabling a taxpayer to direct up to $100,000 from an IRA to qualified charities. The distribution is not included in taxable income.

Want more information? Contact Greg Diehl at greg@areafoundation.org or call 701.234.0756.