Many Texans want to support charitable causes while ensuring their loved ones are financially secure. A charitable lead unitrust (CLUT) offers a way to achieve both goals, providing income to a nonprofit organization for a set period before transferring the remaining assets to designated beneficiaries.
At the Law Office of Carey Thompson, we help individuals in El Paso and Dallas-Fort Worth structure charitable lead unit trusts that align with their financial and philanthropic goals. Call today to schedule a consultation and explore whether a CLUT is right for you.
What Is a Charitable Lead Unitrust (CLUT)?
A CLUT is an irrevocable trust providing financial benefits for charitable and non-charitable beneficiaries. The trust makes annual payments to a designated charity based on a fixed percentage of the trust’s value, recalculated each year. At the end of the trust’s term, the remaining assets are distributed to non-charitable beneficiaries, such as family members or other designated individuals.
Key features of a CLUT include:
- Variable Payments – Annual distributions to charity are based on a percentage of the trust’s total value, which can change from year to year.
- Irrevocable Structure – Once the trust is established, assets cannot be reclaimed, ensuring they are used according to the donor’s original intent.
- Remainder Beneficiaries – After the charitable term ends, remaining assets pass to heirs or other designated individuals, often with tax benefits.
- Potential Tax Advantages – CLUTs can reduce gift and estate taxes while offering potential income tax deductions.
Individuals looking to balance charitable giving with long-term wealth preservation for family members often use this type of trust.
Who Should Consider a Charitable Lead Unitrust?
A CLUT is best suited for individuals who want to make a lasting impact on a charitable organization while also ensuring their heirs receive a portion of their wealth. It is an ideal option for:
- Philanthropic families and individuals who want to provide structured, long-term support to charities.
- Business owners and investors with highly appreciated assets who want to reduce capital gains taxes while retaining control over future distributions.
- High-net-worth individuals looking to minimize estate and gift taxes when transferring wealth to heirs.
- Those with fluctuating income can benefit from tax deductions while supporting charitable causes.
Donors can take advantage of tax benefits by structuring a CLUT properly while ensuring their financial legacy supports charitable and personal beneficiaries.
Key Benefits of a CLUT
A CLUT offers a range of benefits, making it an attractive option for those who want to balance giving with financial planning:
- Ongoing Charitable Support – Provides a steady income stream to a nonprofit organization over a set period.
- Flexible Distributions – Payments fluctuate based on the trust’s value, allowing potential growth over time.
- Estate and Gift Tax Benefits – Assets placed in the trust may qualify for reduced tax liability, benefiting both the donor and heirs.
- Retained Family Wealth – The remaining assets pass to heirs or other non-charitable beneficiaries after the trust term ends.
- Capital Gains Tax Deferral – Appreciated assets placed in a CLUT may avoid immediate capital gains taxes, allowing for greater investment growth over time.
With careful planning, a CLUT can be an effective tool for those who want to support charitable initiatives while preserving their estate for future generations.
How the Law Office of Carey Thompson Can Help
Establishing a charitable lead unitrust requires careful consideration to ensure it aligns with your financial and philanthropic goals. At the Law Office of Carey Thompson, we take the time to understand your needs and create a trust that provides maximum benefits for you and your beneficiaries. Whether you’re selecting a charity, determining the right distribution percentage, or structuring the trust for tax efficiency, we guide you through every step of the process.
Estate planning can feel overwhelming, but we are here to make the process straightforward and stress-free. Serving clients throughout El Paso and Dallas-Fort Worth, our firm provides personalized legal solutions designed to secure your future and support the causes that matter most to you.
Charitable Lead Unitrust Attorney Serving El Paso and Dallas-Fort Worth
At the Law Office of Carey Thompson, we work closely with individuals and families to develop customized estate plans that align with their goals. If you are considering a CLUT, now is the time to take action. Contact our office today to get started with an experienced charitable lead unitrust attorney.