The term charitable lead trust refers to an estate planning tool that first provides a charity with a source of income, eventually providing the remaining assets to a different beneficiary. The near and long term beneficiary of a charitable lead trust is the inverse of a charitable remainder trust.
A charitable lead trust (CLT) is an irrevocable trust that initially provides an income stream to one or more charities. Eventually, the remaining assets are provided to an alternate beneficiary, which is oftentimes members of the donor's immediate family. CLT's are an estate planning tool and can take the following two forms:
Universities and large not-for-profit organizations typically offer information as to setting up a charitable lead trust. The benefit of this arrangement is to initially reduce estate taxes, eventually transferring the assets to family members in a more tax-friendly manner.