Which statement best describes a charitable lead trust (CLT) timing?

Which statement best describes a charitable lead trust (CLT) timing?

• A. It provides income to a charity for a fixed term, with the remainder passing to non-charitable beneficiaries.
• B. It provides income to a charity for a fixed term, with the remainder passing to non-charitable beneficiaries, and is a form of a charitable lead trust.
• C. It provides income to private individuals first, then charity.
• D. It distributes all assets to charity at the end of the term.

Answer: (A)

In a charitable lead trust, the lead stream of payments goes to charity for a fixed term. That means during the term, the charity receives income, and after that period ends, whatever remains in the trust goes to non-charitable beneficiaries, typically family members or other non-charitable heirs. The timing center is charity first for a defined period, then the non-charitable remainder. This ordering distinguishes CLTs from other arrangements, such as charitable remainder trusts, where non-charitable beneficiaries receive income during the term and charity gets the remainder later. The description that best captures this timing is that charity receives income for a fixed term, and the remainder passes to non-charitable beneficiaries.

In a charitable lead trust, the lead stream of payments goes to charity for a fixed term. That means during the term, the charity receives income, and after that period ends, whatever remains in the trust goes to non-charitable beneficiaries, typically family members or other non-charitable heirs. The timing center is charity first for a defined period, then the non-charitable remainder. This ordering distinguishes CLTs from other arrangements, such as charitable remainder trusts, where non-charitable beneficiaries receive income during the term and charity gets the remainder later. The description that best captures this timing is that charity receives income for a fixed term, and the remainder passes to non-charitable beneficiaries.