Estate & Trusts calculator
How much may go to charity, and how much may remain for family?
Estimate payments to charity and what may remain for family.
How much may go to charity, and how much may remain for family?
A charitable lead trust pays charity first for a stated term, with any remaining property passing to family or other noncharitable beneficiaries. The economics depend on the payment design, trust return, Section 7520 rate, term, tax character, and whether the trust is structured as a grantor or nongrantor trust.
Before you act on the number
Use the result to identify which assumption needs verification, then bring that question to the professional helping you make the decision.
Transparent method
Calculate the annual lead payment as either a fixed annuity amount or a unitrust percentage of annually revalued assets.
Discount the charitable payment stream using the current Section 7520 framework to illustrate the lead interest’s present value.
Project trust growth and payments over the selected term to estimate the noncharitable remainder, if any.
Common questions
A CLAT generally pays a fixed annuity amount, while a CLUT pays a fixed percentage of trust assets revalued annually. Their charitable payments and remainder volatility can differ significantly.
The rate helps value the charitable lead and noncharitable remainder interests. When actual net growth exceeds the valuation hurdle, more value may remain for the remainder beneficiaries.
In a grantor CLT, the person who creates the trust may take an up-front income-tax charitable deduction for the present value of the charity's payments, but then reports the trust's income on their own return every year. In a non-grantor CLT, there is no up-front income-tax deduction for the creator; the trust is its own taxpayer and generally deducts the amounts it pays to charity. In both, the gift- or estate-tax value of the family remainder is reduced by the present value of the charity's interest, which is what this calculator illustrates. A tax professional should confirm which design fits.
No. The answer depends on whether the trust is a grantor trust, the recipient charities, the payment terms, and other tax rules. Gift- and estate-tax results are separate from income-tax treatment.
Yes. Investment losses, fees, taxes, and an aggressive payout can exhaust or sharply reduce the trust, especially under a fixed annuity design.
Sources
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