Charitable Lead Trust

The charitable lead trust is virtually a mirror image of the charitable remainder trust.  Under a lead trust arrangement, an annual income from the trust is paid to a qualified charitable organization such as your church for a specified period of years, with the principal of the trust passing to your heirs (children or grandchildren) upon expiration of the trust. 

Thus, the lead trust is a technique for making a "temporary gift" of income to a United Methodist Ministry and eventually passing the property to individual beneficiaries.  Because the value of the charitable interest is tax-deductible for gift and estate tax purposes, the lead trust often is used to reduce taxes while ultimately passing asset ownership to family members.

Example:

Margo establishes a $1,000,000 lead trust which directs that the sum of $50,000 be paid to a designated ministry each year for ten years.  At the end of ten years, the trustee is directed to transfer all the trust assets to Margo's daughter.  While Margo will not realize an income tax deduction for this transaction, at her death her estate will be able to claim an estate tax charitable deduction for the value of charity's interest, even though her daughter ultimately is likely to receive $1,000,000 (or more if the property is appreciating in value).  Just as importantly, Margo has the personal satisfaction of knowing she has provided $500,000 over a ten year period to help support her favorite ministry.