How does a charitable lead trust work?
When you establish a charitable lead trust (CLT), a predetermined amount of the trust’s assets can be given to a charity like St. Jude Children's Research Hospital annually for a set period of time.
Afterward, the remainder of the funds can be transferred to the trust’s non-charitable beneficiaries, such as family members. Setting up a charitable lead trust may reduce or even eliminate gift and estate taxes on trust assets passing to family.
What are the advantages of a charitable lead trust?
- Setting up a charitable lead trust may reduce or even eliminate gift and estate taxes on trust assets passing to family. This is because the future gift to your loved ones will be valued for gift and estate purposes at the “present value” on the date you establish the trust. If the trust is created when interest rates are low and the trust’s investments perform better than expected, there may be additional assets in the trust that will pass to family members free of estate and gift taxes.
- You may not be taxed on income earned by the trust. Other tax benefits vary and you should ask your financial advisor for more information.
- St. Jude or other favorite charities can benefit from receiving annual distributions from the trust and you can see the impact of your gifts.
A charitable lead trust might be right for you if:
- You have a large estate that would be subject to gift and estate tax.
- You have assets that you want to keep in the family and that have a likelihood of significant appreciation in the future.
- You want to make significant annual gifts while you are living to a charity that is important to you, and also pass assets to beneficiaries at a potentially lower gift or estate tax cost.
ALSAC/St. Jude Children’s Research Hospital does not provide tax, legal or accounting advice. This material is prepared and made available to you for informational purposes only and is not intended to provide or be relied upon for tax, legal or accounting advice. You should always consult a tax professional to determine your particular tax benefits that may result from any particular type of gift to charity.
Why St. Jude?
Families never receive a bill for treatment, travel, housing or food — so they can focus on helping their child live.
Treatments invented at St. Jude have helped push the overall childhood cancer survival rate from 20% to more than 80% since it opened in 1962. St. Jude won't stop until no child dies from cancer.
St. Jude shares its discoveries with doctors and scientists in your community and around the world, so every child saved at St. Jude means thousands more children are also saved.
Tax ID Number:
We are a tax-exempt, charitable institution listed in the Federal Internal Revenue Service Publication #78, "Cumulative List of Organizations," revised IRS Code 501(c)(3).
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