Beau Ruff, of Cornerstone Wealth Strategies, has have made available for download his article, Charitable lead trusts do good while reducing estate taxes, published in Tricities Business News. The article begins as follows:
What is a charitable giving technique that doubles as a wealth transfer technique to avoid estate taxes and at the same time works especially well in a low-interest rate environment (as we find ourselves in now)? The charitable lead trust. First, let’s set the stage. This type of trust is usually implemented after other basics are done — things like your will and powers of attorney and health care directive. Also, it is usually (but not always) in the category of trusts set up during your lifetime and not after your death. It is a separate, standalone trust. Assume we have a couple with some extra money who want to benefit a charity, here’s how it could work. The couple has an attorney draft a Charitable Lead Trust (CLT). The terms of the trust say that, for the lifetime of the couple (or the surviving spouse), the CLT will annually pay 5% of the trust to a qualified charity. At the death of the surviving spouse, the money left in trust will go to (presumably) the couple’s children.
Posted by Josh Saret, Associate Editor, Wealth Strategies Journal.