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Planned Giving for Financial Advisors

Charitable Lead Trust

Charitable Lead Trusts Gift Diagram

How they work

  • Your client transfers assets into an irrevocable trust established to benefit Harper College Educational Foundation (and possibly other charities) during its term. The trust may last for a term of years or for your client's lifetime.
  • While the trust is in effect, the trustee will invest the trust funds and make annual payments to Harper College Educational Foundation, which will apply the payments to the purposes your client specifies.
  • At the end of the trust term, the remaining assets are distributed either to your client or to other beneficiaries.

Benefits for your client

  • A Charitable Lead Trust provides immediate support to Harper College Educational Foundation, allowing it to benefit immediately from your client's generosity.
  • Your client will witness during her lifetime the positive impact her contribution has on Harper College Educational Foundation.
  • Your client can claim an income tax charitable deduction if she creates a "grantor" Charitable Lead Trust.
  • Your client will get an unlimited charitable gift tax deduction for the charitable lead interest donated through both a grantor and non-grantor CLT.
  • With a carefully-determined trust term and charitable payout rate, your client can avoid gift tax on the value of the trust remainder interest designated for her beneficiaries.
    • Your client will lower the estate and gift tax cost of passing assets to heirs.
    • Any appreciation within the trust during the trust term will pass free of gift or estate tax to your client's beneficiaries when the trust terminates. This makes a lead trust a particularly good vehicle to transfer value to beneficiaries when a future need arises, for example when a child graduates from college.

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