A nongrantor lead trust provides that all trust assets are transferred to a previously designated third party (children, grandchildren or other heirs) at the conclusion of the trust term. There is no federal income tax charitable deduction of the interest income to a designated Masonic charity for nongrantor lead trusts. However, the donor gains significant estate and gift tax benefits, which may be of greater priority: trust assets are valued as of the date the lead trust is established rather than when they pass to heirs, so appreciation is sheltered from transfer tax. A nongrantor lead trust may be subject to tax on income it may earn, but the donor is not liable for any resulting tax.

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