Understanding and Drafting Trusts in Delaware: Charitable Remainder and Charitable Lead Trusts

Generally, a charitable remainder in trust is not eligible for the income, gift or estate tax purposes unless the trust is a charitable remainder annuity trust or charitable remainder unitrust described in Section 664 of the Code. A charitable remainder trust is an irrevocable trust that provides for a specified distribution, at least annually, to one or more beneficiaries, at least one of which is not a charity, for life or for a term of years, with an irrevocable remainder interest to be held for the benefit of, or paid over to, one or more charities.

A client’s estate plan and charitable objectives may be advanced by giving a partial interest in property to a charity. This article explains Charitable Remainder and Charitable Lead Trusts.