Charitable Lead Trust

Standard Use:

Charitable lead trusts (CLTs) are a great charitable and gift planning technique. You can gift a large sum to a trust. A charity receives a periodic distribution for some number of years, say 6% of the value, paid annually for 20 years. The result is a dramatic reduction of gift tax cost on a large transfer of assets that will be received by the charity. Great gift tax play.

Tailored Use:

Spin this by setting up a separate CLT for each child and match the term of each CLT to the number of years until each child reaches retirement age, say 65.

Key:

You still have a gift tax benefit, but now you have effectively given each child a retirement plan. If your heirs blow their inheritances, these funds will be preserved for their later years.