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§ 5.8 PLANNED GIVING: OTHER FORMSincome taxation. Consequently, the tax treatment accorded a charitable lead trustdepends on whether the grantor trust rules are applicable.If the grantor trust rules are applicable, so that the donor is treated as theowner of the trust, the income of the trust will be taxable to the donor and not tothe trust. This means that the trust will not have any income tax liability.If the grantor trust rules are inapplicable, so that the donor is not treated asthe owner of the trust, the income of the trust will be taxable to the trust. In thissituation, the charitable lead trust is allowed an unlimited charitable deductionfor the payments from it (pursuant to the trust agreement) to the charitable organizationthat is the income beneficiary.(e) Testamentary Use of Lead TrustsLike the other forms of planned giving, a charitable lead trust can be used to benefita charitable organization out of the assets of a decedent’s estate. That is, theincome interest thereby created for a charitable organization can be transferred asa charitable bequest by means of such a trust. The remainder interest would bereserved for one or more noncharitable beneficiaries, such as the decedent’s heirs.In this situation, a charitable deduction is available to the estate. Again, thededuction is for the present value of the income interest being transferred to acharitable organization.When a federal estate tax charitable deduction becomes available, there is noneed for anyone to recognize the income of the charitable lead trust. That is,there is no application of the equivalent of the grantor trust rules, whereby anindividual is considered the owner of the trust, in this context.(f) Private Foundation RulesAs is the case with many types of trusts used in the planned giving context, acharitable lead trust, being a split-interest trust, is treated as a private foundationfor certain purposes.In general, the private foundation rules that pertain to a charitable lead trustare those concerning termination of private foundation status, governing instrumentrequirements, self-dealing, excess business holdings, jeopardizing investments,and taxable expenditures. 26 A charitable lead trust, however, is exemptfrom the excess business holdings and jeopardizing investments rules when theamounts in the trust for which a charitable contribution deduction was allowed(namely, the income interest) have an aggregate value of no more than 60 percentof the total fair market value of all amounts in the trust.§ 5.8 PLANNED GIVING: OTHER FORMSThere are, in addition to the above four forms of planned giving, other forms ofthis type of giving. These include:• Charitable contributions out of an estate 2726 See § 3.4.27 None of these forms requires a split-interest trust for its creation, although split-interest trusts can be createdas part of an individual’s estate. See Chapter 8. 165