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Charitable Lead Trust

This is also an irrevocable trust into which you donate assets that are held for a period of time (life or a specific number of years).  The annual income generated from the trust is given directly to Saratoga Bridges.  Upon the donor’s death or when the trust term expires the assets revert back to you or to your beneficiaries.

Charitable Lead Trust Example

Mr. Johnson decides to create a charitable lead trust with corporate bonds that are worth $1 million. The bonds pay 5 percent annually. The lead trust is set up to pay the income from the bonds, $50,000 a year, to Saratoga Bridges for the next 20 years. This means that Mr. Johnson is able to make a gift of $1 million to Saratoga Bridges over the next 20 years.

At the end of 20 years, all of the corporate bonds – the full $1 million – will be given to Mr. Johnson’s. Because of the lead trust, the children get $1 million and Mr. Johnson reduces estate and gift taxes and preserves family wealth. 

There are costs involved in setting up a Charitable Remainder Trust or a Charitable Lead Trust such as legal, administrative and start-up costs.  A professional advisor can counsel you regarding the tax advantages of a trust.