Everything you always wanted to know about charitable lead trusts but were afraid to ask.

By Kathleen Stephenson and Lisa B. Petkun

However, because the trust is a grantor trust, the settlor will be taxed on the income earned during the term — even though income may be paid to the charitable organization.

If the charitable lead trust is a non-grantor trust, the settlor will not be taxed on income earned by the trust — the trust will be taxed instead. But, the settlor will not be entitled to an income-tax deduction for the value of the charitable interest when the trust is created.