With a charitable lead trust you transfer cash or assets, which are appreciating in value, into a trust with the intention of supporting Shriners Hospitals for Children first, then returning the remaining assets to your family.

The major benefit of creating a lead trust is in transferring assets to family members at very little gift or estate tax costs. You could potentially pay a relatively small gift tax for eventually transferring a large amount of assets to your children. This type of gift provides you with a gift tax deduction, not an income tax deduction.

Types of Payments
The trustee makes payments from the trust to the selected charity or charities as either a fixed annuity payment or a percentage of the trust.

An annuity payment: With this type of payment, Shriners Hospitals for Children receives the same amount annually whether trust assets appreciate or depreciate. If the trust income is insufficient, the trustee uses principal to make up the difference.

A unitrust payment: With this option, we receive a variable amount based on a specified percentage of the fair market value of the trust assets, valued annually. You set the percentage upon creating the trust. The payments fluctuate with trust appreciation or depreciation. If the trust income is insufficient, the trustee uses principal to make up the difference.