What is a Charitable Lead Trust (CLT)?
A CLT is just about the opposite of a CRT. You transfer an asset to the trust, which reduces the size of your estate and saves estate taxes. But instead of paying the income to you, the trust pays it to a charity for a set number of years or until you die. After your death, the trust assets will go to your spouse, children or other beneficiaries.
A Charitable Lead Trust (CLT) is a powerful way to make a future transfer of assets to your heirs at a significantly reduced gift and estate tax cost, while also supporting your charity with income. During a specified number of years, the lives of one or more individuals, or a combination of the two, all contributions are paid to the charity of your choice. At the end of the trust term, the assets pass to beneficiaries named by the donor. The donors choose the trustee. You can fund a CLT with cash, publicly traded securities, closely-held stock, income-producing real estate, partnership interests, or a combination of the above. You can establish a CLT during your lifetime, or as a testamentary trust through your will. A lead trust may be structured to provide a fixed dollar contribution annually (CLAT) or a fixed percentage contribution (CLUT). Two Types of Lead Trusts There are two basic types of Lead Trusts: Non-Grantor and Grantor. In a non-grantor CLT, the most common type, the tru
