Charitable Lead Trust (CLT)
A charitable lead trust is the opposite of a charitable remainder annuity trust (CRAT). The CLT provides an excellent opportunity to provide immediate support for your choice of charities rather than through one of many deferred gift plans. The income generated by the trust assets is distributed to the charity during your life. At the termination of the trust, the principal reverts back to you or may be distributed to one or more persons you designate.
Advantages:
- Beneficial for significant estate and gift tax concerns
- Can see the immediate effects on the charity or charities
- Leave assets for loved ones at a significantly reduced gift and estate tax cost
Limitations:
- The principal goes to the ministry and cannot go to your heirs
- The IRS assumes the trust will earn a certain percentage each year; if the trust fails to earn the specified percentage, penalties will apply
- Must choose between a Grantor or Non Grantor trust
- Legal counsel should prepare trust documents
Asset considerations for CLTs:
- Securities
- Real estate
- Cash
- IRA and other retirement plan assets
If you would like further information on CLTs, contact your financial advisor, attorney or the Calvary Chapel Stewardship Department at 954-556-4606.
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