January 15, 2010, Newsletter Issue #160: Charitable Remainder Trusts and Charitable Lead Trusts

Tip of the Week

Under US tax law, it is possible to set up charitable trusts that can provide you with a way to give to charity while also procuring significant tax benefits for yourself and your heirs. Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) but do not qualify as exempt under IRS 501(c)(3), but do offer significant tax benefits.

Charitable Remainder Trusts pass the remainder of the assets held in trust to a designated charity upon the death of the grantor or one or more beneficiaries. Holders of such trusts can take a tax deduction for the portion of the trust's assets that is expected to be paid to a charity in the future. The Charitable Lead Trust is essentially the reverse of a Charitable Remainder Trust: payments are made from the trust to a designated charity throughout the grantor's lifetime, and the remainder of those assets returns to the donor's estate or other beneficiaries upon the grantor's death.

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