What is a Charitable Lead Trust and how can it help my estate planning?

A Charitable Lead Trust is a Trust where a charity or charities have an annuity interest in the Trust for a term of years or on a measuring life and your designated beneficiaries receive the remainder held in the Trust after the term of years or measuring life ends. A Charitable Lead Trust can reduce income, gift and/or estate taxes. The Charitable Lead Trust can greatly reduce the value of the remainder interest gifted or transferred to your designated beneficiaries. The IRS uses actuarial tables with a modest growth rate to value the remainder interest gifted to the remainder beneficiaries of the Trust. If the assets held in the Charitable Lead Trust grow in excess of the IRS rate (currently about 2%), then the appreciation in excess of the IRS rate will transfer to the remainder beneficiaries tax free. The Charitable Lead Trust will allow you to fulfill your philanthropic goals, while transferring wealth to the next generation with minimized transfer taxes.

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