charitable lead trust

Also found in: Acronyms.

Charitable Lead Trust

An irrevocable trust into which the grantor deposits assets, with the income from the investment of these assets going to a designated charity for a certain period of time. After that time expires, the remainder of the assets and income are given to the trust's beneficiaries. A charitable lead trust allows the grantor to provide for his/her survivors after death while reducing to a minimum the estate tax because some of the assets were given to charity. See also: Charitable remainder trust.

charitable lead trust

A trust that pays an income to a charity for a specific length of time then leaves the remainder of the trust to designated beneficiaries, usually family members. The purpose of the charitable lead trust is to reduce taxes on the estate of the deceased while maintaining the family's control of the estate's assets. Compare charitable remainder trust.

Charitable lead trust.

A charitable lead trust (CLT) is an irrevocable trust that allows you to provide current income generated by assets in the trust to a qualifying charity. When the trust terminates after the period specified in the trust agreement, the trust beneficiaries you've named receive the assets.

Because of the delay in the transfer of assets to your beneficiaries, your gift is valued for tax purposes at its discounted present value, based on IRS tables. That amount may be less than the gift's market value, which affects the size of the charitable deduction you can claim.

Transferring assets in a CLT not only reduces the value of your estate for estate tax purposes but also eliminates potential capital gains tax on any increased value of the assets.

References in periodicals archive ?
This article discusses two main types of charitable trusts, charitable remainder trusts (CRTs) and charitable lead trusts (CLTs); describes the advantages of each; and discusses which to use and when, based on your clients' goals.
46) We believe the reason for this underuse is that success in transferring untaxed wealth in a charitable lead trust is not certain.
It's not the charitable lead trust that's bad," points out McCoy.
Charitable lead trust filers continued to report the highest average gross income per return.
The Helen Christiansen Testamentary Charitable Lead Trust was set up to last for 20 years, with any remaining assets then passing to Hamilton if she survived.
With a charitable lead trust, the charity gets the income stream for a set period of time.
CCT officials counter that it is a charitable lead trust with John G.
However, charitable lead trust filers continued to report the highest average gross income per return.
Another type of charitable trust is the charitable lead trust (CLT), which pays an income stream to the charity on the front end, with a remainder interest payable to noncharitable beneficiaries.
Lew and Ott suggested that owners who want to donate their nonqualified stock options while still alive give the options to a charitable lead trust.
The charitable lead trust provides the grantor the opportunity to return property to his children or grandchildren years down the road," Grundfest said.
A charitable remainder trust filters the income generated to charity after the donor's death, and the charitable lead trust generates the income for the charity during the donor's lifetime.

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