Charitable Lead Trust

A Charitable Lead Trust (CLT) 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.

Who does it work for?

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 CLT 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 CLT, the charity receives an income stream for the life of the trust.

Benefits of a CLT

Current Income Tax Deduction
A gift to a grantor lead trust can provide you with a current income tax deduction that can offset all forms of income.

Gift and Estate Tax Planning
The Charitable Lead Trust offers you an effective alternative to the payment of gift and estate taxes. In many cases, a CLT provides an excellent method for passing assets to heirs at a reduced transfer tax, while making a significant gift to charity

Charitable Impact
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.

Helpful Downloads

CLT Handbook

An in-depth guide to the workings and variations of Charitable Lead Trusts

Donor story

John and Linda Davidson use a Charitable Lead Annuity Trust (CLAT) to reduce income and estate taxes.

Gift Summary

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