9.6 Charitable Lead Trust

• Library: A Lawyer's Guide to Estate Planning: Fundamentals for the Legal Practitioner (ABA) (2018 Ed.)

9.6 Charitable Lead Trust

A charitable lead trust (CLT) is the opposite of the charitable remainder trust. In a lead trust, the charity receives an annual payment for a term of years, at the conclusion of which time the remainder passes to a family member or other beneficiary of the donor. Aside from philanthropic motives, the trust can be used to lessen the gift or estate tax costs of transferring property to a beneficiary.³³ Of course, the lesser gift or estate tax cost occurs because the charity has an intervening right to the income from the transferred property.

A charitable lead trust is subject to most of the same requirements as the charitable remainder trust; however, there are several differences. There is no 5% minimum payment...