Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

Question: 1 / 660

In a Charitable Lead Trust (CLT), what happens to the income generated by the trust?

It is retained by the trust for reinvestment

It goes directly to charity

In a Charitable Lead Trust (CLT), the primary feature is that the income generated by the trust is directed to a charitable organization for a specified period of time. This structure ensures that a portion of the trust's income provides financial support to the chosen charity, allowing the trust creator to contribute to philanthropic causes while also potentially benefiting from tax advantages associated with the donations. After the designated term ends, the remaining assets in the trust typically pass to non-charitable beneficiaries, often family members, which highlights the dual objective of supporting a charity while also preserving wealth for heirs.

Understanding the mechanisms of a Charitable Lead Trust is crucial as it aligns charitable giving with estate planning strategies, making it an effective tool for individuals who wish to combine philanthropy with financial and tax planning considerations.

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It is distributed among family members

It accumulates until the trust is dissolved

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