Question

What are the potential tax and non-tax benefits of establishing a charitable lead trust? Explain

Answer 1

Charitable lead trust- It is a irrevocable trust that is primarily designed to provide financial support to the charity. In this process, amount is donated out of the trust to the charity for a particular period, after the expiration of that period, amount is paid to the beneficiary.

Potential tax benefits- Are as following:

1. Income tax deductions for charitable donations
2. Estate and gift tax is saved

Non tax benefit- It sets up a way for the beneficiary to make a continuous charitable contribution without issuing the mannual monthly payment.