A Better Way to Give: The OCLAT’s Philanthropic Triple Bottom Line

Donors to the American Heart Association (AHA) know better than anyone: Giving back can enhance your mental, physical, and emotional wellbeing. Yet, what about planned giving, which allows donors to help save lives and reduce their tax burden while boosting mental and physical health? That’s an irresistible triple bottom line. A savvy donor can in fact maximize both the feel-good effects and economic benefits of philanthropy–– enter the Optimized Charitable Lead Annuity Trust (OCLAT), which maximizes large, ongoing donations while building generational wealth.

Writing a check at the end of the year isn’t the only—or the best—way to support life-saving causes like the AHA. For clients who are planning to give significant amounts of money while simultaneously considering the impacts of their legacy, the peer-reviewed OCLAT strategy (PDF) offers a powerful approach. By simply shifting pre-existing assets into an OCLAT investment account with an organization as a charitable recipient, donors can create a highly tax-advantaged giving strategy that benefits a charity they care about while enhancing financial stability for themselves and their families.

Philanthropists as iconic as Jacqueline Onassis Kennedy leaned on the Charitable Lead Annuity Trust (CLAT) to build out their legacies and raise awareness for heart disease. Unfortunately for the first lady, her children chose not to fund the CLAT, opting instead to halt charitable giving and take an immediate inheritance of just $18 million (with $23 million paid in estate taxes out of the $43.7 million valuation). If the Jackie Onassis Trust’s beneficiaries had executed that CLAT worth $43.7 million, the family would have inherited about $43 million tax-free in 2018, with charities receiving $85 million. That money would have been life-changing for her family, charitable beneficiaries including AHA, and the people those organizations served.

Let’s explore what makes the OCLAT so effective.

Potential Benefits an OCLAT Can Offer Your Clients

• Maximize Charitable Deduction: Receive a dollar-for-dollar tax deduction in the year of contribution (up to 30% of donor’s annual gross income).


• Lifetime Giving Engine: Donor selects a 15-30 year charitable term whereby annual donations are made from the OCLAT to their favorite charity(ies).


• Protect Assets: At funding, OCLAT assets are immediately shielded from creditors, lawsuits, and estate/gift/income taxes.


• Build a Lasting Legacy: After a charitable term of 20-30 years, the remaining OCLAT funds can be returned tax-free (or passed to heirs free of gift or estate taxes). OCLAT models show the family has 3x as much wealth at the end of the term (versus doing nothing at all).

How the OCLAT Works: AHA Donor Case Study Example

Consider Thomas Strong, a philanthropic entrepreneur and long-time supporter of the American Heart Association who earned $1 million and sold his business with a $5 million profit in California. Rather than pay taxes at the top federal and state rate (50%), Strong opens an OCLAT investment account and transfers $1 million cash/stocks/crypto/real estate into the account. With a 30-year $1 million OCLAT:

• Strong immediately reduced his taxable income, saving ~$500,000 in taxes.


• He donates from the OCLAT a total of ~$3 million over the 30-year period (pursuant to a fixed schedule), with annual payments made to the AHA.


• Strong can expect to have ~$5 million in the OCLAT account at year 30 (assuming 8% annual return), which he can receive back tax-free (or pass to his family without estate or gift taxes).

Take Action Now

For clients like Strong, who are passionate about philanthropy, an OCLAT provides a unique opportunity to amplify giving while securing long-term financial growth with reduced tax burdens. It’s time to let the philanthropic triple bottom line help bring your clients closer to their goals and the creation of their legacy.

About the Author

Jonathon Morrison

A renowned innovator and technician in his space, Jonathon’s thought leadership and knack for developing novel, cutting-edge solutions have resulted in multiple advances in the field of advanced tax and estate planning. In addition to publishing multiple peer-reviewed articles featured on the cover of the national Estate Planning Journal, Jonathon has been featured in Forbes, Fortune, Bloomberg, and Barrons, as well as several nationally syndicated podcasts, with respect to strategies involving income and estate tax minimization, charitable and philanthropic giving, business exit and succession planning, and asset protection.