Charitable Lead Trusts

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You want to give to the causes you care about. You also want to protect your family’s financial future. A Charitable Lead Trust, or CLT, lets you do both at the same time. It is one of the most powerful tools in estate planning, and it works especially well for families in Atlanta, Georgia who have significant assets and a genuine desire to make a lasting charitable impact. At Slowik Estate Planning, located in Atlanta, Georgia, we help clients understand how these trusts work, how Georgia law governs them, and how federal tax rules affect their planning decisions.

Table of Contents

What Is a Charitable Lead Trust?

A Charitable Lead Trust is a legal arrangement where you transfer assets into an irrevocable trust. The trust then makes payments to one or more qualified charities for a set period of time. When that period ends, the remaining assets pass to your chosen non-charitable beneficiaries, such as your children or grandchildren.

A charitable lead trust is an irrevocable trust designed to provide financial support to one or more charities for a period of time, with the remaining assets eventually going to family members or other beneficiaries. Think of it this way: the charity gets to “go first,” receiving payments during the trust’s term. Your heirs receive what is left over at the end.

Charitable lead trusts operate for a set term, which could be the life of one or more individuals, and payments are made to one or more designated charitable beneficiaries for that time period. After the end of the trust term, the remainder of the trust is distributed to non-charitable beneficiaries, such as family members.

There are two main types of CLTs. A Charitable Lead Annuity Trust, or CLAT, pays a fixed dollar amount to charity each year. A Charitable Lead Unitrust, or CLUT, pays a set percentage of the trust’s assets, which are revalued annually. The annuity method is a payment of a fixed sum or a fixed percentage of the initial fair market value of the trust assets. An annuity payment remains the same from year to year. By contrast, the unitrust method is a payment of a specified percentage of the trust assets, which are revalued every year, so the amount fluctuates depending on the value of the trust assets.

You can fund a CLT during your lifetime or through your will. A charitable lead trust can be funded either during the lifetime of the individual creating the trust or by will. Either way, the trust must be properly drafted to meet both federal IRS requirements and Georgia state law. That is where working with an experienced attorney matters most.

How Georgia Law Governs Charitable Lead Trusts

Georgia has a clear legal framework for charitable trusts. The Revised Georgia Trust Code of 2010, found in O.C.G.A. Title 53, Chapter 12, governs how trusts are created, administered, and enforced in this state. Article 9 of that chapter, specifically O.C.G.A. §§ 53-12-170 through 53-12-175, addresses charitable trusts directly.

Under O.C.G.A. § 53-12-170, a charitable trust is a trust in which the settlor provides that the trust property shall be used exclusively for charitable purposes. The law defines charitable purposes broadly. Charitable purposes include the relief of poverty, the advancement of education, the advancement of ethics and religion, the advancement of health, the advancement of science and the arts and humanities, the protection and preservation of the environment, and other similar subjects having for their object the relief of human suffering or the promotion of human civilization.

One unique feature of Georgia law is that charitable trusts can last indefinitely. Under O.C.G.A. § 53-12-173, a charitable trust shall be valid even though under the trust provisions it is to continue for an indefinite or unlimited period. This is different from many other types of trusts that are subject to rules against perpetuities.

Georgia law also provides important oversight for charitable trusts. In all cases in which the rights of beneficiaries under a charitable trust are involved, the Attorney General or the district attorney of the circuit in which the major portion of trust property lies shall represent the interests of the beneficiaries and the interests of this state as parens patriae in all legal matters pertaining to the administration and disposition of such trust. This oversight protects charitable beneficiaries and ensures the trust is used as intended.

Proper trust administration is critical once a CLT is established. Georgia’s trust code sets out detailed rules for trustees, accounting, investments, and administration in Articles 11 through 16. Following these rules protects both the grantor and the trustee from legal liability.

Federal Tax Benefits of a Charitable Lead Trust

The tax benefits of a Charitable Lead Trust are real and significant. The specific benefits you receive depend on how the trust is structured, whether it is a grantor trust or a non-grantor trust, and the applicable IRS rules at the time you create it.

In a grantor CLT, you are treated as the owner of the trust for income tax purposes. This means you can claim an immediate income tax deduction in the year you fund the trust. However, you must also report the trust’s income on your personal tax return each year. The deduction in the year of the transfer is limited to 30% of the donor’s adjusted gross income. This is true even if cash is used to fund the trust, as the trust income is considered “for the use of” the charitable beneficiary.

In a non-grantor CLT, the trust itself pays taxes on its income. However, the trust receives a charitable deduction under IRC § 642(c) for amounts paid to charity each year. You may also receive an estate or gift tax deduction based on the present value of the charitable interest. In the case of a non-grantor trust where trust assets pass to heirs, the property contributed to the trust will be considered part of the donor’s estate, but the donor’s estate will be eligible for an estate tax charitable deduction for the value of the interest paid to the charity. This may not only reduce the amount of tax your estate has to pay upon your death, but it may also preserve wealth for your heirs.

One important consideration relates to the IRS Section 7520 rate. Consider the IRS 7520 interest rate. The lower the current rate is, the higher the present value calculation for the stream of payments to the charitable beneficiary. A higher present value for the charitable interest means a larger deduction for you.

Another key benefit is that asset appreciation inside the trust does not increase your taxable estate or gift. When the assets eventually pass to the noncharitable beneficiary, any appreciation in the property’s value is not included in your gross estate for purposes of determining estate tax liability, nor is the appreciation considered in determining the value of your gift to the noncharitable beneficiary. This makes CLTs an excellent tool for transferring appreciating assets to the next generation at a reduced tax cost. Speak with Slowik Estate Planning about your Estate Tax Planning in Atlanta Georgia options today.

How the One Big Beautiful Bill Act Changes Charitable Planning in 2026

Federal tax law changed significantly when the One Big Beautiful Bill Act was signed into law on July 4, 2025. The One Big Beautiful Bill Act marked the most significant overhaul of federal tax legislation since 2017, impacting taxes, credits, and deductions across the board. If you are planning charitable giving in 2026 and beyond, you need to understand how these changes affect your strategy.

One of the most important changes affects the itemized deduction for charitable contributions. Under H.R. 1, Section 70425, an itemized deduction for charitable contributions is allowed only to the extent that an individual’s aggregate charitable contributions exceed 0.5% of the individual’s adjusted gross income. Individuals can only deduct charitable gifts that exceed one-half of 1% of their adjusted gross income. If a married couple has $200,000 of income and gives $5,000 to charity, in 2025 they were able to deduct all $5,000, but in 2026, they have to reduce their tax deductions by one-half of 1% of their income.

There is also a new cap on deductions for high-income earners. The One Big Beautiful Bill Act also limits the maximum deduction for top-bracket income earners in the top 37% tax bracket to 35%. This means that for every $100 donated, a top-bracket taxpayer saves only $35 in taxes instead of $37.

These changes make a Charitable Lead Trust even more valuable as a planning tool. A CLT allows you to lock in a structured charitable giving plan that generates tax benefits at the trust level, rather than relying solely on itemized deductions. Donors interested in more advanced strategies may also consider charitable trusts, such as Charitable Lead Trusts. A CLT provides an immediate or scheduled stream of payments to charity for a set term, with any remaining assets passing to heirs, often at a reduced gift or estate tax cost.

If you have international assets or beneficiaries, these changes may interact with your global planning in ways that require careful attention. Slowik Estate Planning can help you think through those issues, including through our International Estate Planning services.

Who Should Consider a Charitable Lead Trust in Atlanta?

A Charitable Lead Trust is not the right tool for everyone. It works best for people who have a genuine charitable intent, significant assets, and a desire to reduce estate or gift taxes while passing wealth to the next generation. So, who is the ideal candidate for a CLT in Atlanta?

First, consider families with appreciated assets. If you own stock, real estate, or a business interest that has grown in value, a CLT lets you transfer those assets into a trust without triggering immediate capital gains. The trust can then sell the assets, reinvest the proceeds, and make annual payments to charity. Any remaining appreciation passes to your heirs at a reduced gift or estate tax cost.

Second, high-net-worth individuals who want to reduce their taxable estate should consider a CLT. The federal estate tax exemption remains high under current law, but proper planning still matters for larger estates. A CLT removes assets from your estate while also benefiting charity. Combined with other tools like Asset Protection strategies, a CLT can form part of a comprehensive wealth preservation plan.

Third, parents and grandparents who want to pass wealth to heirs in a tax-efficient way should explore CLTs. If you make a contribution to a non-grantor charitable lead trust during your lifetime, you may be eligible for a gift tax charitable deduction, based on the present value of the interest going to the charity. However, if the remainder beneficiary of a charitable lead trust is someone other than yourself, then you might be subject to gift tax on the value of the remainder interest. Proper planning can minimize or eliminate that gift tax liability.

Finally, philanthropically minded families who want to support causes like education, healthcare, or the arts in Atlanta will find a CLT to be a meaningful way to make a lasting impact. Under Georgia law, charitable purposes include the relief of poverty, the advancement of education, the advancement of health, and the advancement of science and the arts, among others. If those causes matter to you, a CLT lets you give in a structured, tax-smart way.

Regardless of your situation, it is important to work with a knowledgeable attorney who understands both Georgia trust law and federal tax rules. You should also review your existing wills and trust documents to see how a CLT might fit into your broader estate plan. Slowik Estate Planning, based in Atlanta, Georgia, is ready to help you evaluate your options and build a plan that reflects your values and your goals.

FAQs About Charitable Lead Trusts in Atlanta, Georgia

What is the difference between a Charitable Lead Trust and a Charitable Remainder Trust?

A Charitable Lead Trust pays the charity first, during the trust’s term, and then distributes the remaining assets to your heirs at the end. A Charitable Remainder Trust works in the opposite direction. It pays income to you or your family members first, and then the remaining assets go to charity at the end of the trust’s term. Both tools have real tax benefits, but they serve different goals. If your priority is passing wealth to your heirs while also supporting charity, a CLT is usually the better fit.

Can I choose which charities receive payments from my Charitable Lead Trust?

Yes. You choose the charitable beneficiaries when you create the trust. The charities must be qualified organizations under IRS rules, meaning they must be recognized as tax-exempt under Section 501(c)(3) of the Internal Revenue Code. You can name one charity or several. You can also set up the trust to allow the trustee to select among a group of approved charities. Georgia law under O.C.G.A. § 53-12-170 defines charitable purposes broadly, so there is a wide range of organizations that can qualify.

Is a Charitable Lead Trust irrevocable?

Yes. Once you fund a Charitable Lead Trust, you cannot take the assets back. The trust is irrevocable, which is what allows it to generate the tax benefits described above. This is a significant commitment, so it is important to think carefully before funding a CLT. You should review your overall financial situation, your estate plan, and your charitable goals with an attorney before moving forward. Slowik Estate Planning can help you decide whether a CLT is the right choice for your circumstances.

How does the One Big Beautiful Bill Act affect Charitable Lead Trusts in 2026?

The One Big Beautiful Bill Act, signed on July 4, 2025, introduced a new 0.5% floor on itemized charitable deductions for individuals beginning in 2026. It also capped deductions for top-bracket earners at 35% instead of 37%. These changes reduce the value of direct charitable giving for high-income taxpayers. A Charitable Lead Trust structured as a non-grantor trust can still generate significant estate and gift tax deductions that are not subject to these new limitations. This makes CLTs more attractive than ever as a planning tool for high-net-worth families in Atlanta.

How do I get started setting up a Charitable Lead Trust in Atlanta, Georgia?

The first step is to schedule a consultation with an estate planning attorney who understands both Georgia trust law and federal tax rules. At Slowik Estate Planning in Atlanta, Georgia, we work with clients to review their assets, their charitable goals, and their family situation before recommending any specific strategy. We will explain your options clearly and help you understand the costs, benefits, and legal requirements involved. Contact us today to set up your consultation and take the first step toward a plan that works for you and the causes you care about.

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