Charitable Lead Trust

Charitable Lead Trust

A Charitable Lead Trust is an estate planning tool that provides financial support to a charitable organization for a specified period, after which the remaining assets are transferred to non-charitable beneficiaries, such as family members.

In this arrangement, the trust makes annual or periodic payments to the charity for a predetermined duration, which can be set for a number of years or until the death of a specific individual. The assets in the trust are typically invested, and any growth during the trust term benefits the eventual non-charitable beneficiaries.

For example, if a donor establishes a Charitable Lead Trust for a term of 10 years, the charity would receive a fixed income from the trust for that time. After the 10 years, the remaining assets in the trust would pass to the donor’s heirs, potentially reducing their taxable estate and allowing the donor to benefit from charitable deductions during the trust’s lifetime.