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.
The charitable lead trust option is an easy way to support NCUF's critical financial education initiatives and I encourage more credit unions to take advantage of it, " said BECU President/CEO Gary Oakland, who also currently is chairman of the NCUF.
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.
46) We believe the reason for this underuse is that success in transferring untaxed wealth in a charitable lead trust is not certain.
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).
For grantor charitable lead trusts, this is not a problem--the income is taxable to the donor anyway.
As stated above, a charitable lead trust (CLT) is essentially the reverse of a charitable remainder trust.
Among the more popular are permutations of two traditional charitable donation plans: the charitable remainder trust and the charitable lead trust.
If you don't feel comfortable denying your heirs the principal of your investments but can manage without the income yourself, consider a charitable lead trust.
With a charitable lead trust, assets are placed in trust with a specified amount of income from the trust distributed to charity, while you leave the property to a family member or other noncharitable beneficiary.
By establishing a charitable lead trust,(24) donors can make current charitable contributions of income to a community foundation while reserving capital for family or other beneficiaries.

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