Charitable Lead Trusts

A charitable lead trust (“CLT”) is an irrevocable trust that pays a fixed amount or percentage of trust assets to one or more charities of the settlor’s choosing for a term of years, with the remaining assets eventually going to family members, trusts, or other beneficiaries. The income tax advantages of a CLT will vary depending on its particular form, but generally settlors will recognize estate and gift tax benefit through the use of this technique. CLT STRUCTURES There are two general types of CLTs – a grantor CLT and a nongrantor CLT.  Each can be in the form of a unitrust or an annuity trust.  A grantor CLT provides an income tax deduction on its creation to the settlor, however the settlor is then taxed on all income that will…

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