A charitable lead trust (CLT) is a mirror image (similar though exactly opposite) of a charitable remainder trust. Like a CRT, a charitable lead trust is an agreement among the donor, the charity and a trustee that places a portion of the donor's assets in trust. (The charity can also serve as the trustee.) Here though it is the trust that receives the income derived from the trust assets. At the end of the term, the trust corpus passes to the donor's designated beneficiaries. That is, the beneficiary is the remainderman.

Annual income from a CLT must be made to the charity as either a fixed percentage of the fair market value of the assets as revalued each year (charitable lead unitrust, or CLUT) or a fixed dollar amount (charitable lead annuity trust, or CLAT). The method of payment, length of the trust term, type of management, and ultimate beneficiaries are all designated by the donor when the trust is established and cannot be changed once put into effect.

This trust can be established during the donor's life, or at death by will. The most commonly used assets to fund charitable lead trusts are cash, securities and real estate. Any income earned above and beyond what has been designated for the charity is added to the trust principal, increasing the ultimate gift to the designated beneficiaries.

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