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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.