Charitable Lead Trusts

Another planned giving strategy, charitable lead trusts (CLTs), provide a method of making a significant contribution to the CEC while transferring income-producing assets to your heirs at a greatly reduced tax cost. It differs from the CRT in that the CEC receives the income for the term of the trust, which may be for a measuring life (or lives) or a term of years. At the end of the term, the remaining assets in the trust are transferred to the beneficiaries you designate in the trust. 

The value of the assets placed in this type of irrevocable trust is frozen for estate and gift tax purposes. Your beneficiaries thus receive any future appreciation in the value of the trust assets free from wealth transfer taxes. In most cases, you receive an immediate income tax charitable deduction equal to the value of the income passing to the CEC.

 

To return to the Planned Giving page, click here.