Charitable lead trust is the opposite of charitable remainder trust. At first the donor transfers his property to the lead trust, which pays out a certain percentage of the trust assets over the specified term of years to the designated charity. At the expiry of the trust term the remaining trust properties along with appreciation or growth is passed on to the heirs of the donor or beneficiaries of the trust.
The value of trust assets are set or fixed at the point of transfer to the trust at a discount deducting the present value of the income stream to charity. Any appreciation or growth factor is completely ignored. As such, there is considerable savings on gift tax when the donor transfers his property to the trust and significant reduction of estate tax when at the end of the trust term the assets of the entity pass on the beneficiaries. However, the growth or appreciation component goes to the heirs or beneficiaries without any estate or gift tax.
Given these tax advantages, charitable lead trusts is a very attractive proposition.
(More http://acronyms.thefreedictionary.com/
http://www.ias.edu/waystogive/planned/ )
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