Charitable Lead Trust

The CLT donor gives the assets to a trust, which distributes the trust income to the charity for a stated period of time. When the income phase of the trust expires, the trust distributes the remaining principal to the donor’s heirs.

• The CLT donor gets tax benefits, but he or she gets neither trust income nor principal. The donor is usually very wealthy, so he or she does not personally need the principal or income. But the donor does want to minimize significant potential income, estate, and/or gift tax liability.
  
• The charity (income beneficiary) gets the trust income during the donor’s life or for a term of years.
  
• The donor’s heirs (remainder beneficiaries) get the trust principal when the donor dies or the term ends.