The primary purpose of a Charitable Lead Trust is to provide a stream of income to a charity for a specified period of time, typically measured in years.

Charitable Lead Trusts can be funded with a combination of cash and appreciated assets, allowing the grantor to make a significant charitable contribution while also receiving a tax deduction for the fair market value of the appreciated assets.

Charitable Lead Trusts are typically administered by a bank or trust company, which serves as the trustee and is responsible for managing the trust assets and making distributions to the charity and the non-charitable beneficiaries.

Charitable Lead Trusts typically have a duration of 10 to 20 years, although they can be shorter or longer depending on the grantor's objectives and the specific terms of the trust.

Distributions from a Charitable Lead Trust are typically tax-free to the charity, as the trust itself is considered a charitable organization for tax purposes.

Charitable Lead Trusts offer a number of potential benefits, including reducing the taxable estate of the grantor, generating a stream of income for a charity, and receiving a tax deduction for the fair market value of appreciated assets.

Charitable Lead Trusts have several potential drawbacks, including the loss of control over the assets placed in the trust, the risk that the trust may not generate enough income to meet the charitable lead annuity or unitrust payments, and the potential for GSTT liability.

A Charitable Lead Annuity Trust (CLAT) is a type of Charitable Lead Trust that pays a fixed amount to the charity each year, regardless of the performance of the trust assets.

A Charitable Lead Unitrust (CLUT) is a type of Charitable Lead Trust that pays a variable amount to the charity each year, based on a percentage of the fair market value of the trust assets.

The primary difference between a CLAT and a CLUT is that a CLAT pays a fixed amount to the charity each year, while a CLUT pays a variable amount based on a percentage of the fair market value of the trust assets.

The generation-skipping transfer tax (GSTT) is a tax on transfers of property to grandchildren or other generations that skip a generation, such as from a grandparent to a grandchild.

A Charitable Lead Trust can be used to reduce GSTT liability by transferring assets to the trust during the grantor's lifetime, thereby removing them from the grantor's taxable estate and reducing the potential for GSTT liability.

The minimum amount that must be transferred to a Charitable Lead Trust in order to qualify for a GSTT exemption is $100,000.

The maximum amount of GSTT that can be saved by using a Charitable Lead Trust is $1,000,000.