What is a charitable lead trust and how does it work?

A charitable lead trust (CLT) is a type of estate planning law used in Hawaii. It is a trust set up to benefit a charity for a certain period of time before the assets can be passed on to other beneficiaries. A CLT is set up by the grantor, or the person setting up the trust. The trust typically states that the charity will receive payments from the trust each year for a specific period of time. After that set period of time is over, the trust will terminate and the remainder of the assets in the trust will be distributed to the remaining beneficiaries. The grantor can also choose to specify what assets are placed into the trust and how these assets are distributed to the charity. For example, the grantor may choose to place stocks or bonds into the trust. Whenever the stocks or bonds increase in value, the charity will receive a larger payment from the trust. The grantor can also specify the amount of money that is paid to the charity each year. A benefit of using a CLT is that it can help the grantor reduce any tax burdens. The payments to the charity are usually considered tax-deductible. This can help reduce the amount of inheritance or estate taxes that the grantor’s beneficiaries have to pay. It can also allow the grantor to make a larger donation to the charity, while still providing for their beneficiaries.

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What is a charitable lead trust and how does it work?

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