CLT
Charitable lead trust — pays income to charity for a term; remainder to family. Reduces gift/estate tax on transfers to heirs in high-value estates.
| Facet | Detail |
|---|---|
| Also called | Charitable lead annuity trust (CLAT), charitable lead unitrust (CLUT) |
| A-B / A-B-C role | None |
| When created | During life or at death |
| Revocable | No |
| Inter vivos / testamentary | Either |
| Typical beneficiaries | Charity (lead); heirs (remainder) |
| Primary purpose | Fund charity now; pass remainder to family at reduced transfer tax |
| Marital deduction | No (charitable lead, not marital) |
| Uses estate exclusion | Remainder gift tax value reduced by charitable lead interest |
| In survivor's estate | No for properly structured lifetime CLT assets |
| Basis step-up | Carryover on lifetime funding |
| Income tax | Grantor or non-grantor CLT — different charitable deduction timing |
| Crummey powers | No |
| GST / dynasty | Remainder to heirs may trigger GST planning |
| Spendthrift | For remainder beneficiaries |
| See-through (IRA) | Not typical |
| Key tradeoff | Transfer tax efficiency vs complexity and charity commitment during lead term |