Understanding Charitable Lead Trusts

Maximize Your Impact with Charitable Lead Trusts

What if you could support your favorite charity and lower your taxes all while ensuring your loved ones inherit more? A charitable lead trust (CLT) lets you do exactly that. It’s a powerful estate planning tool that benefits both you and the causes you care about.

At Lappin Estate Planning, we help people like you create a lasting impact while protecting their wealth. A CLT lets you contribute to charity now and pass on your remaining assets to family members later—often with considerable tax savings.

Whether you are building generational wealth or shaping a philanthropic legacy, our team will guide you every step of the way.

Ready to discuss your charitable contribution options with our lawyer? Call us at 561.778.8590 or submit a contact us form to schedule a consultation.

What Is a Charitable Lead Trust?

A charitable lead trust (CLT) is a way to give to charity now and pass wealth to loved ones later. Here’s how it works: You place assets in a trust, which donates to a charity for a set time. Maybe you want to fund medical research, support education, or give back to your community.

When that time is up, whatever’s left goes to your beneficiaries—often with big tax savings.

It’s like planting a tree. The charity enjoys the shade first, and later, your family enjoys the full benefits. If you want to support a cause while keeping wealth in the family, a CLT might be the perfect fit.

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Your legacy is your story, your hard work, and your loved ones’ future. We make estate planning simple, personal, and built around what matters most to you. Our lawyer is here to help you create a clear plan that gives you confidence today and security for tomorrow.

Benefits of a Charitable Lead Trust

A charitable lead trust helps you give back while protecting your wealth. Here’s why people choose this type of trust over others:

Lower taxes: Reduce estate and gift taxes, so more of your money stays in the family. In some cases, there may be an income tax charitable deduction.
Support a cause you love: Give to charity without giving away your entire estate.
Control your wealth: Decide how assets are distributed, ensuring your legacy lives on.

It’s a win-win—your favorite charity benefits now, and your loved ones receive assets later with fewer tax burdens.

Types of Charitable Lead Trusts

Not all CLTs work the same way. You have two main options:

Charitable lead annuity trust (CLAT): Pays a fixed dollar amount to charity each year, no matter how the trust’s value changes. A charitable lead annuity trust is great if you prefer predictability.
Charitable lead unitrust (CLUT): Pays a percentage of the trust’s value, which adjusts annually. This works well if you’re comfortable with fluctuating payments based on market performance.

Choosing the right CLT depends on your goals and risk tolerance. Not sure which one fits your needs? Consider speaking with an estate planning attorney.

How to Get Started with a Charitable Lead Trust

Setting up a charitable lead trust is a rather straightforward process, though it’s still a good idea to get guidance from an attorney to make sure you are doing everything right. Here’s how it works:

Choose a charity – Pick a cause that means something to you.
Decide on the type of charitable trust – CLAT for fixed payments, CLUT for flexible ones.
Set the trust term – How long will the charity receive payments?
Name your beneficiaries – Decide who inherits the remaining trust’s assets.
Fund the trust – Transfer cash, stocks, or real estate.

If you choose to work with Lappin Estate Planning, we will handle all the legal details so you can focus on your legacy and impact.

Frequently Asked Questions About Charitable Lead Trusts

No, they work in opposite ways. A charitable lead trust donates to charity first, then passes remaining assets to beneficiaries. A charitable remainder trust provides income to beneficiaries first, with the remainder going to charity. A charitable remainder trust is an income tax strategy while a charitable lead trust is an estate and gift tax strategy.

You can fund a CLT with cash, stocks, bonds, real estate, or other appreciating assets. Assets that generate income can help maximize both charitable gifts and tax benefits.

Yes, a donor-advised fund (DAF) can receive payments from a CLT. This allows flexibility in choosing charities over time, rather than committing to a single organization upfront.

No, but they offer great tax benefits. Depending on how the CLAT is structured, you may reduce gift and estate taxes. In some cases, you may also receive an immediate income tax deduction.

Your designated beneficiaries, such as family members, friends, or even another trust. They receive the remaining assets, often with reduced estate or gift tax liability.

A CLT isn’t just for wealthy individuals. It may be a good option for anyone who wants to support a cause, reduce estate taxes, and pass on wealth efficiently oftentimes without making a taxable gift.

You decide the term. It can last for a fixed number of years or the lifetime of an individual. A longer trust term can provide greater tax benefits while maximizing charitable giving.

Any IRS-qualified nonprofit can be a beneficiary. This includes charities focused on education, healthcare, religious causes, environmental efforts, and more.

Yes. You can split payments among multiple charities or designate a different charity each year. This allows flexibility in directing your charitable impact.

You can name a backup charity or allow your trustee to select a similar organization. This ensures your charitable intent is honored no matter what happens.

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Your future needs a plan—one that makes the most sense for your unique situation. At Lappin Estate Planning, we’re here to guide you through every step, from wills and trusts to asset protection and probate matters. Let’s build a strategy that fits your needs. Contact us today to start planning.