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

A charitable lead trust is a type of estate planning tool that enables individuals to leave money to a charity before passing assets to their beneficiaries. This type of trust is often used to reduce estate taxes, or to pass on tax advantages to charity. In Idaho, a charitable lead trust works by transferring assets such as cash or investments to a trust, which is managed by a trustee chosen by the donor. The trustee then distributes a predetermined amount annually to a charity of the donor’s choice for a set number of years. At the end of the trust period, the remaining assets are then transferred to the donor’s beneficiaries. For example, if an individual has a $500,000 charitable lead trust, and they designate 10 years for the trust to remain active, the trustee will disburse $50,000 every year to the charity. At the end of the 10 years, the remaining $500,000 will be passed to the donor’s beneficiaries (minus any taxes incurred). Charitable lead trusts also provide other benefits such as avoiding estate taxes, reducing the inheritance tax burden, and creating a charitable tax deduction. Overall, a charitable lead trust is an estate planning tool that enables individuals to pass assets to a charity and reduce their final tax burden. This type of trust is beneficial for individuals who want to give to a charity today, and ensure that the funds will still be available for their beneficiaries in the future.

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

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