What is a charitable lead trust?

A Charitable Lead Trust (CLT) is a trust in which a charity receives income from the trust for a set period of time. After this time period has elapsed, any remaining assets from the trust revert back to the original donor or to his or her chosen beneficiaries. CLTs can be an excellent estate-planning tool because they offer many tax advantages to both the donor and the charity. In Colorado, the donor of a CLT can receive tax benefits if he or she donates the assets of the trust to charity. The current value of the donated assets is considered a charitable contribution and can be deducted from the donor’s taxes. The remainder of the trust is taxed to the charity at a lower rate than it would be for the donor. Additionally, any assets that are transferred back to the donor or the donor’s beneficiaries at the end of the trust’s term are not subject to estate taxes. One of the main benefits of a CLT is that the donor is able to provide financial support to a charity of their choice. This can help further the mission and goals of the charity, while providing tax savings to the donor. It is important for donors to consult with an attorney before establishing a CLT, as there are various rules and laws related to these trusts that should be considered.

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