Charitable Lead Trusts
With charitable lead trusts, the donor can donate an asset's income stream for a period of years to a charity instead of the remainder interest. The remainder interest can then pass to a private party under the direction of the grantor (i.e. grandchild, child, etc.).

UniTrusts
The charitable lead unitrust (CLUT) is a charitable annuity that allows the donor to give variable annual amounts to a charity for a limited period of time. The donor transfers property into the trust, then a fixed percentage payout is used to calculate the amount that is sent to the charity each year. Since the value of the investments within the trust will fluctuate from year-to-year, the payment is recalculated each year based on the new value of the trust.

Characteristics of a CLUT:

  • Variable annuity stream to a charity, fixed percentage.
  • Multiple deposits are allowed.
  • Effectively removes assets from the estate of the grantor.
  • At the end of the term, remainder interest is paid to a non-charitable beneficiary.
  • The donor receives an income tax deduction on FMV of the property transferred.

Annuity Trusts
A charitable lead annuity trust (CLAT) is a charitable annuity setup directly through an insurance company, or a similar organization, regularly engaged in the business of issuing annuity contracts. The donor makes an initial deposit to the CRAT and the charity receives the fixed annual income steam for a fixed number of years. At the end of the term of the trust, the donor's beneficiary will receive the remaining interest.

Characteristics of a CLAT:

  • Fixed annuity stream to a charity, fixed percentage.
  • Initial deposit is only allowed.
  • Effectively removes assets from the estate of the grantor.
  • At the end of the term, remainder interest is paid to a non-charitable beneficiary.
  • The donor receives an income tax deduction on FMV of the property transferred.
Charitable Gift Annuities

Related Articles
  1. Retirement

    Guiding Clients on Charitable Remainder Trusts

    Clients who wish to make donations to charity can reap an enormous tax deduction with charitable remainder trusts, but it must be set up correctly.
  2. Financial Advisor

    Top Tips for Maximizing Charitable Deductions

    Charitable donations can be a great financial planning tool. Here are some ways to make the most of them.
  3. Managing Wealth

    The Best Charitable Remainder Trust for You

    Help a favorite cause and avoid a tax bite: These are the key reasons to set up a CRT. But which version best fits your needs?
  4. Taxes

    Fund a Lifetime of Giving with Donor Advised Funds

    Donor advised funds can have tremendous tax, cost and administrative benefits.
  5. Investing

    Putting Your Money to Work for the Greater Good

    There are several ways to put your capital to work for social or charitable causes, while also facilitating moves that support your personal finance goals.
  6. Insurance

    Using Life Insurance To Make Charitable Donations

    Your life insurance policy can be a great tool for charitable giving. Find out how.
  7. Taxes

    Donor Advised Funds: Tax Efficient Giving

    Donor advised funds are a tax efficient way to donate large sums to charitable organizations.
  8. Taxes

    3 Most Popular Charitable Investment Accounts

    Charitable investment accounts aren't just for the wealthy. There are several options for donors who want to manage their own funds.
  9. Retirement

    How to Minimize Estate Taxes via Charitable Giving

    Here are several ways to reduce your taxable estate while providing a gift to a worthwhile cause.
Frequently Asked Questions
  1. I'm about to retire. If I pay off my mortgage with after-tax money I have saved, I can save 6.5%. Should I do this?

    Only you and your financial advisor, family, accountant, etc. can answer the "should I?" question because there are many ...
  2. My wife and I both converted our Traditional IRAs to Roth IRAs over a decade ago and have invested the maximum allowed each year since. We're buying our first home soon. Do we both qualify for one-time, tax-free, $10,000 distributions?

    You and your spouse each qualify for a penalty-free distribution of up to $10,000 for the purchase, acquisition or construction ...
  3. Is a Thrift Savings Plan (TSP) a qualified retirement plan?

    Take advantage of the government's retirement plan for employees with the Thrift Savings Plan. As with a 401(k), contributions ...
  4. Who manages the assets in a Roth 401(k) account?

    Learn how to personally manage the assets in your Roth 401(k) plan and determine the best options available to help meet ...
Trading Center