Goal: Pass assets to heirs at potential tax savings
Benefit: Charitable tax deduction, favorable estate tax circumstances
A CLT is a powerful way to make a future transfer of assets to your heirs at a significantly reduced gift and estate tax cost, while also supporting your charity with income. The trust is established for a specified number of years, the lives of one or more individuals, or a combination of the two. The income from the trust paid to the charity of your choice. At the end of the trust term, the assets pass to beneficiaries named by the donor. The donors choose the trustee.
You can fund a CLT with cash, publicly traded securities, closely-held stock, income-producing real estate, partnership interests, or a combination of the above. You can establish a CLT during your lifetime, or as a testamentary trust through your will. A lead trust may be structured to provide a fixed dollar contribution annually (CLAT) or a fixed percentage contribution (CLUT).
Two Types of Lead Trusts
There are two basic types of Lead Trusts: Non-Grantor and Grantor.
In a non-grantor CLT, the most common type, the trust assets revert to your children, grandchildren, or other heirs at the end of the trust term. A non-grantor CLT provides a gift tax charitable deduction and is useful in reducing the cost of intergenerational wealth transfers.
In a grantor CLT, the trust assets revert to you, rather than to your heirs, at the end of the trust term. Donors creating grantor CLTs receive a large charitable contribution income tax deduction. Such a gift structure may be particularly useful if you wish to make a multi-year pledge and accelerate future deductions into the current year.What Are The Advantages of a Non-Grantor CLT?
How Do I Create a CLT?
Donors establishing a CLT should be advised by an attorney who is experienced in the area of charitable trusts and estate planning. Please contact us by phone or e-mail so that we can assist you or use our response/request form.