What Jackie Kennedy Knew about CLATs and Estate Planning
Jacqueline Kennedy Onassis remains celebrated as a beloved former first lady and cultural icon. However, her lesser-known legacy includes innovative stewardship of her family’s wealth and philanthropic impact.
Following her husband’s assassination, Jackie Kennedy managed a $44 million estate. According to a Forbes article titled “Elevating Your Estate And Legacy: A Lesson From Jackie Kennedy,” she demonstrated remarkable foresight in her planning decisions.
Jackie Kennedy established a Charitable Lead Annuity Trust (CLAT), now often called the Jackie Onassis Trust. Through her will, she created an option allowing her children to transfer inherited assets while gaining significant charitable, tax, and non-tax benefits. The trust structure included stocks, real estate, and other capital assets.
Benefits of the CLAT Structure
The CLAT offered three primary advantages to her children. First, it enabled them to avoid federal estate tax on transferred assets. Second, it facilitated tax-efficient charitable giving over a defined period. Third, CLAT assets could continue generating investment returns, ultimately returning to beneficiaries or passing to future generations after the charitable period ended.
Additionally, annual charitable distributions from the CLAT created income tax deductions against the trust’s taxable income.
The Road Not Taken
Despite Jackie’s recommendations, her children chose not to fund the CLAT. According to a 1996 New York Times article, had beneficiaries utilized a $100 million trust through the Jackie Onassis framework, the family would have inherited approximately $98 million tax-free by 2018, with charities receiving $192 million. Instead, the estate paid $23 million in estate taxes, leaving just $18 million.
Modern Trust Evolution
Since the 1960s, more sophisticated trust variants have emerged. The Optimized CLAT accomplishes four goals: generating dollar-for-dollar tax deductions in the funding year, returning one to five times the initial contribution, immediately exempting contributed assets from 40% federal gift and estate taxes, and shielding transferred assets from the contributor’s personal creditors.
These complex strategies will likely gain popularity as federal estate taxes decline in coming years. An estate planning attorney can determine which trust structure best serves individual family circumstances and generational wealth goals.
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