If a donor wants to donate money to charity, but doesn’t want to sell off their assets, they can instead create a charitable lead unitrust. Under a charitable lead unitrust, the donor puts their assets in a trust, and the trust pays out money to the charity every year. As an example, a donor might put a stock portfolio within a trust, and the dividends from that portfolio would pay out to the charity. Once the trust has expired, the money goes back to the donor. In the meantime, the donor doesn’t need to worry about tax consequences—the trust is a separate entity and it is paying out income to the charity.
The downside is that the donor cannot take their assets back during this time. The assets belong to the trust until the trust is discontinued, usually at a prearranged time such as after five, ten, or even twenty years. The terms of the trust also cannot be changed, unless both the donor and the charity agree to changing the terms. So, the donor does sacrifice some of their control over the assets in question, which will also be managed by a trustee.