Charitable Lead Trusts

Safeguard Your Assets for the Future

A charitable trust is structured in a way that makes the trust exempt from income taxes while allowing you to provide for both designated individuals and charities that you care about.

A charitable lead trust (CLT) allows you to make an impact on the causes you care about today while also providing for your family later. With a charitable lead trust, you transfer cash or assets to a trust that makes payments to the charity(ies) of your choice for a period of time. When the term ends, the remaining assets pass to the individual beneficiaries you select. There are two types of charitable lead trusts.

A charitable lead annuity trust (CLAT) pays a fixed amount each year to the charitable beneficiaries.

A charitable lead unitrust (CLUT) pays a variable amount each year to the charity(ies) based on a fixed payout rate of the value of the assets in the trust. With a unitrust, if the trust’s assets increase in value, the payments to the charitable beneficiaries increase as well, and vice versa.

Benefits

• You may qualify for a tax deduction and the payments can reduce or even eliminate the transfer taxes due when the remaining funds revert to your heirs.
• All appreciation that takes place in your trust becomes tax-free to your heirs.
• You can use your available estate tax unified credit to further reduce the taxes on transfers to your heirs.

How It Works

1. Transfer cash, securities, or other appreciated property into your trust.
2. You may receive an immediate income tax deduction for a portion of your contribution to your trust.
3. The charity(ies) receives annual payments.
4. When the trust ends, your individual beneficiaries receive the remaining assets held by the trust.