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Charitable Lead Trusts

Gifts that leave more to your heirs and benefit Agnes Irwin.

A Charitable Lead Trust (CLT) is a powerful way to make a future transfer of assets to your heirs at a significantly reduced gift and estate tax cost. During a specified number of years, an annuity or a fixed percentage of the trust assets is paid to The Agnes Irwin School. At the end of the trust term, the assets revert back to you or to anyone you name. There are two types of lead trusts:

Grantor
In a grantor lead trust, the assets revert to you – rather than to your heirs – at the end of the term. A grantor lead trust may be useful if you wish to accelerate future charitable deductions. For people who have significant assets, a CLT offers gift and estate tax relief.

Non-Grantor
In a non-grantor lead trust, the assets revert to your children, grandchildren, or other heirs at the end of the term.

A non-grantor CLT has the following advantages:

  • You receive a charitable gift tax deduction for the annual trust payments to The Agnes Irwin School.
  • The income earned by the trust is excluded from your gross income and is, therefore, not taxable to you. In effect, this produces a reduction of your taxes over the trust term.
  • Any appreciation in the assets during the term of the trust is not subject to additional gift or estate taxation.
  • A Charitable Lead Trusts makes it possible for you to pass on to your heirs a larger estate after taxes than would otherwise be possible.

Your financial advisor can suggest ways to fund this trust.

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Margaret Welsh