Previous issues of Professional Notes explored charitable remainder trusts (CRTs), popular planning giving vehicles that allow people and businesses to transfer property to charity after paying income to non-charitable beneficiaries for a period of time. We noted that The New York Community Trust had many years of experience as a remainderman of CRTs, distributing the money to effective nonprofits according to the donor’s wishes, be they broad or narrow.
This issue discusses another planning giving vehicle, for which The Trust is also an ideal beneficiary— the charitable lead trust (CLT). Often described as a reverse CRT, it also is an irrevocable trust with both charitable and non-charitable beneficiaries. Like the CRT, the charitable lead trust can be structured to pay either an annuity interest or a unitrust interest to one or more interim beneficiaries for a specified term, before the assets are disbursed to the remainder beneficiary. But unlike the CRT, the charitable lead trust makes the initial or “lead” payments to one or more charities for a period of time, and distributes the remainder of trust property to one or more non-charitable beneficiaries after the lead interest expires.
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This material was developed for the use of professionals by The New York Community Trust. It is published with the understanding that neither the publisher nor the author is engaged in rendering legal, accounting, or other professional advice. If legal advice or other expert assistance is required, you should speak to your own tax or other legal or accounting advisor.
