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

A charitable lead trust is an estate planning tool that can be used to reduce taxes and support charitable organizations. In a charitable lead trust, a donor transfers money or assets to a trust and designates a charity as the beneficiary. The charity is given the right to receive regular payments from the trust over a period of time, typically a number of years, and then the remainder of the trust goes to the donor’s family. The advantage of a charitable lead trust is that it allows the donor to benefit from the tax breaks associated with charitable giving while also providing for their family after they are gone. The payments made to the charity are tax deductible and the remainder of the trust is taxed at a lower rate than if it had been left directly to the donor’s family. In order to create a charitable lead trust in Washington, the donor must set up the trust with a licensed attorney and include specific language in the trust documents. This language includes details about the payments to the charity, the period of time for which these payments will be made, and how any remaining money in the trust will be allocated. The trust must then be funded with money or assets and filed with the Washington State Department of Revenue. After that, the donor can enjoy the tax benefits associated with the charitable lead trust.

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

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