Enhanced Charitable Lead Annuity Trust (ECLAT)

Instead of structuring the annual annuity payments to charity so that they are moderate and level throughout the entire term of the CLAT, the annual annuity payments under an ECLAT begin relatively low and level where they remain up until the final year of the CLAT (the year of death of the grantor) when the final payment is substantially larger and designed to produce a present value for the entire stream of payments that is equal to the amount of the CLAT contribution. At the end of the term, whatever remains in the CLAT after the final payment to charity is distributed to the grantor’s family, or to other non-charitable beneficiaries. Because the charitable payment schedule looks a bit like a shark’s fin when depicted on a graph, this strategy is sometimes called a Shark-Fin CLAT.