Charitable Lead Trusts

For some people, “giving back” is a lifelong commitment, and philanthropy a priority. In my practice area of estate planning, there are several types of trusts that facilitate charitable bequests. Our focus today is on one specific type: Charitable Lead Trusts.  These are different from Charitable Remainder Trusts, which we have discussed in a previous blog. There are similarities and differences between the two, as well as varying tax benefits. Let’s take a somewhat abbreviated overview of both. There are four types of Charitable Lead Trusts, and each carries different tax benefits. Some of these advantages occur during the grantor’s lifetime; others may be deferred to trust beneficiaries of the next generation.  The four types of Charitable Lead Trusts are each named for the party who will (ultimately) receive the remainder of the assets after the term of the trust has ended: In a Charitable Remainder Trust (CRT), income payments are made to designated charities for a fixed period of years, or during the grantor’s lifetime, or sometimes, a combination of those two factors. When payments are made annually, this is known as an Annuity Trust. If payments are made at other intervals, the trust is known as a Charitable Lead Unitrust. When the specified term ends, trust assets revert either to the trust creator (grantor) or other non-charitable beneficiaries as designated in the trust. This is a major difference from a CRT, in which, after the grantor’s death, trust assets go to the named charity or charities. Another main difference between Charitable Lead Trusts and CRTs is that CRTs are tax-exempt, and Charitable Lead Trusts are not. The type of charitable trust chosen will need to meet the grantor’s specific goals as to their charitable inclinations and financial/tax situation. For that reason, as well as the complexity of the trusts themselves, it is essential to work in tandem with a skilled estate planning attorney, experienced in trusts. If you would like more information or are ready to proceed with plans for a charitable trust, I urge you to contact me at your convenience. Perhaps your needs only include some basic estate planning matters; I’m here to help with those as well! Bring your questions, your concerns, and your objectives, and we will resolve them, and achieve them, together! To set up a consultation, contact me at 818.956.9200.  

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