Charitable Lead Trust (CLT)

A Charitable Lead Trust is an excellent way to pass assets to heirs at a reduced transfer tax, while making a significant gift to charity. A CLT is a powerful instrument for donors who anticipate high estate and gift taxes in transferring their wealth to heirs. The two main types of Charitable Lead Trusts are the Grantor Lead Trust, in which the assets of the trust revert to the donor at the end of the trust term; and the Non-grantor Lead Trust, in which the assets of the trust are transferred to one or more beneficiaries designated by the donor. With a CLT, the charity receives an income stream for the life of the trust.

How does a Charitable Lead Trust Work?

A Charitable Lead Trust is an irrevocable, taxable, split interest trust. The donor funds a trust that will pay an income stream to a charity(s) of their choice for a specified term. The assets of the trust are invested and managed by a trustee. At the end of the trust term, remaining trust assets revert to the donor, or are transferred to one or more non-charitable beneficiaries designated by the donor.

Sample Case Strategies

Below are a few examples of how Charitable Lead Trusts have been used in specific financial strategies.

• Evers - Income Averaging Using a Grantor CLAT
• Sullivan - Zero Estate Tax Planning Using a CLAT
• Spears - Funding a Charitable Pledge Using a CLT

Want To Learn More?

The Charitable Lead Trust Handbook is an in-depth guide to the inner-workings of CLTs.