A charitable lead trust benefits you, your family, and your favorite charity.  You transfer assets into the trust, the charity receives an income stream for a period of years or your lifetime; then, your family receives a lump sum of the assets that remain in the trust and the trust terminates.

It’s a split interest trust, which simply means that you or your family has an interest and your favorite charity has an interest.  Below, we highlight 5 charitable lead trust benefits for you and your family.

1. You receive an income tax deduction for the present interest of the income stream that goes to the charity.
2. Assets in the trust can be sold without you paying capital gains taxes.
3. You get to benefit the charity of your choice; this can be a public charity such as your library or animal shelter or it can be your own private charity such as a family foundation.  You can get credit for your gift from the charity during your lifetime, even if the income stream to the charity doesn’t begin until your death.
4. Your family gets a lump sum at the end of the trust’s term.  This lump sum is outside your estate for federal estate tax purposes.
5. The lump sum assets can go to your family in an asset protected trust so that they’re protected from bankruptcy, lawsuits, and divorcing spouses.

Ask a qualified estate planning attorney if a charitable lead trust and its benefits may be a good fit in your estate plan.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Tags: Charitable Planning, CLT, Tax Planning

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