Charitable Lead Trust

This trust makes payments, either a fixed amount (annuity trust) or a percentage of trust principal (unitrust), to a charity during its term. At the end of the trust term, the principal can return either to the donor or to the heirs named by the donor. The donor may claim a charitable tax deduction for making a lead trust gift. A lead trust can reduce gift and estate taxes or provide a charitable deduction for the donor. Charitable lead trusts are most appealing to wealthy donors who want to pass appreciated assets to their heirs without paying a substantial amount in taxes.