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charitable lead trust

   Also found in: Acronyms 0.01 sec.
Charitable Lead Trust
A trust designed to reduce beneficiaries' taxable income by first donating a portion of the trust's income to charities and then, after a specified period of time, transferring the remainder of the trust to the beneficiaries.

Notes:
The whole idea of a charitable lead trust is to reduce taxes upon the estate left by the deceased. This is done by donating to charities from the estate until all taxes are reduced. Once this is accomplished, the estate is then transferred to the beneficiaries, who typically will face lower taxes.

Many different organizations offer information regarding the set-up of these types of trusts. Examples are universities, colleges, and non-profit societies.


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.

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While charitable lead trusts (CLTs) first make a stream of payments to one or more charitable beneficiaries, then leave remaining trust assets to non-charitable beneficiaries, charitable remainder trusts (CRTs) do the opposite.
A Charitable Lead Trust fund provides for a regular, fixed amount to be paid to a fund or charities of your choosing for a specific number of years, after which, the remainder of the trust passes to your designated heirs or other beneficiaries.
Another example is a charitable lead trust, which allows the wealthy to give an allowance to their children, written off as donations rather than income.
 
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