The Charitable Lead Trust

Transferring property to and individuals you wish to benefit is not always an either/or proposition. With careful planning, you may be able to arrange your transfers to accomplish more than one objective. For example, if you have assets that are appreciating, children who may want to start a business in the future, and a desire to assist , you may wish to consider creating a charitable lead trust. Such an arrangement would allow you to benefit —until your children are ready and able to step out on their own—while minimizing any potential transfer taxes.

Under this plan, you irrevocably transfer assets to a trustee and provide that payments be made to us for a certain number of years (or until the end of your or another's life). Then the principal is distributed to your children, grandchildren, or other heirs. The principal passes to your heirs at greatly reduced gift- and estate-tax rates and sometimes escapes them altogether. The charitable lead trust may appeal to individuals who wish to make a gift but retain the property in their family.

There are two types of charitable lead trusts: the grantor lead trust and the more popular nongrantor lead trust, which was made famous by Mrs. Jackie Kennedy Onassis.

• The Nongrantor Lead Trust
• The Grantor Lead Trust

Please note: Because the federal estate tax has been repealed for 2010, there is no current estate tax in 2010 for the gifts described on this page. However, the consensus opinion among professionals is that Congress will enact an estate-tax law that may be retroactive to January 1, 2010. It is very important that you seek the advice of your estate-planning attorney to determine what changes, if any, need to be made to your existing estate plans, and then again if Congress reinstates the estate tax sometime later this year.
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