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 ?
(3,4) Split-interest trusts include three distinct types: charitable remainder trusts, charitable lead trusts, and pooled income funds.
A charitable lead trust is essentially the reverse of a charitable remainder trust; the donor grants a right to payment to the charity, with the remainder reverting to the donor (or his named beneficiaries).
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.
For example, charitable lead trusts, discussed extensively by Cooper, (43) can be used to transfer value free of tax, but the circumstances in which that may occur are largely outside a decedent's control.
When the donor makes the charity the remainder beneficiary, the split interest gift is commonly referred to as a "deferred gift." A split interest gift may be made in trust or property; however, charitable split interest trusts include many of the more popular methods of charitable giving such as charitable remainder trusts and charitable lead trusts (both discussed below).
(34) (Unfortunately, many of these same rules may also apply to transactions between related parties and charitable lead trusts or charitable remainder trusts.)
For grantor charitable lead trusts, this is not a problem--the income is taxable to the donor anyway.
A gift into a charitable lead trust is attributable, one-half, to each of the spouses.
Kind of the reverse is the charitable lead trust, which tends to be set up upon death.
A charitable lead trust (CLT) is useful for minimizing estate taxes on the assets you leave to your children or grandchildren, especially if you expect those assets to appreciate.
Some examples include: Charitable Remainder Unitrust, Charitable Remainder Annuity Trust, Donor Advised Funds and Charitable Lead Trust.
"Another concept that I think is overlooked is the charitable lead trust," noted John Brown of Minor & Brown PC, a Denver-based law firm.

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