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Charitable Lead Trust
A charitable lead trust is a special type of charitable trust that receives and holds income-producing assets for a specified term of years. During this time, the trust makes annual income payments to charity and then, at the end of trust term, the assets are distributed to the donor�s family or returned to the donor. This is also an irrevocable gift.
Details of a charitable lead trust
- This trust is "upside down" from a unitrust. A lead trust pays to charity for a term of years and then passes the remainder to family instead of paying to family first and then passing remainder to charity.
- The highest charitable deduction is obtained by using the lowest applicable federal rate which is also opposite of a unitrust.
- The tax deduction for making the gift of income to charity offsets some of the gift or estate tax due. There is no income tax deduction with a charitable lead trust.
Benefits of a charitable lead trust
- Estate or gift tax deduction allows a transfer of more property to family minimizing gift or estate tax. Growth in the trust is passed to family.
- Can help charitable organizations with current needs.
A charitable lead trust can be established at Juniata for a minimum gift of $100,000. The minimum age of the income beneficiaries is 35.