Charitable Lead Trust

A charitable lead trust is an irrevocable agreement in which a donor transfers assets to a trust that creates an income or lead interest for a charity. The trust’s remainder interest either comes back to the donor or passes to some other non-charitable beneficiary, typically the donor’s heirs. The charitable interest can be designated for the benefit of one or more charitable beneficiaries, including public charities, donor-advised funds and private foundations.

Benefits of a Charitable Lead Trust

Contributing assets to a charitable lead trust qualifies the donor for a charitable tax deduction.

The charitable lead trust offers you an effective alternative to the payment of gift and estate taxes. In many cases, a charitable lead trust provides an excellent method for passing assets to heirs at a reduced transfer tax, while making a significant gift to charity.

Unlike a charitable remainder trust, the charity(ies) of choice begin receiving an income stream at the beginning of the life of the trust, allowing donors to see their charitable impact up front.

Is a Charitable Lead Trust Right for You?

A charitable lead trust is a powerful charitable planning tool used to generate an income tax charitable deduction or a gift or estate tax charitable deduction. A charitable lead trust is often used by individuals who have a significant income event or anticipate high estate and gift taxes in transferring their wealth to heirs.

The two main types of charitable lead trusts are the grantor lead trust, in which the assets of the trust revert to the donor at the end of the trust term; and the non-grantor lead trust, in which the assets of the trust are transferred to one or more beneficiaries designated by the donor. With a charitable lead trust, the charity receives an income stream for the life of the trust.

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Charitable Lead Trust Downloadable Resources

Charitable Lead Trust Handbook

An in-depth guide to the workings and variations of charitable lead trusts.

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Donor Story

John and Linda Davidson use a charitable lead trust to reduce income and estate taxes.

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Gift Summary

Download a PDF version of this page.

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