Are There Different Types of Charitable Lead Trusts?
There are two types of charitable lead trusts: the charitable lead unitrust and the charitable lead annuity trust. Regardless of the type, you create the lead trust by making an irrevocable transfer of funds for the benefit of a charitable organization for either a lifetime or specified term of years. Charitable Lead Unitrust When you establish a charitable lead unitrust, you decide what percentage of the trust’s assets fair market value you wish the charitable organization to receive. For example, you may decide that 6% of the trust’s value will be paid to the charitable organization. Because it is a unitrust, the amount paid out is based upon the trust’s annual reevaluation, which can vary from year to year. For example, Mrs. Phillips set up a 25-year charitable lead unitrust with a $3 million gift. She wanted 6% of the trust paid out to a specified charity. The charity received $180,000 during the first year. In the second year, the trust had been valued at $3,150,000, increasing th
