Invest in Your Community Through a Charitable Lead Trust (you greatly reduce or avoid estate tax on trust assets passing to family members as long as a portion of the trust income goes to charity for a few years).
You have a sizable estate and are trying to plan for the future. You are able to provide amply for your children even though estate taxes will be considerable. But, now you are concerned about the welfare of your grandchildren. Will much be left after the taxes on your children’s estates?
You set up a Charitable Lead Trust. You donate part of your estate to the trust now, and the income goes to the PineBelt Foundation’s general endowment fund or to a named fund for a designated number of years. Your estate taxes are reduced and the donated property is not taxed to your children.
When your grandchildren reach maturity, the trust terminates and the assets are used for their benefit. You have contributed to charity during all those years, the trust has grown tax-free, and now your grandchildren will receive much more than they would have otherwise.
What is a Charitable Lead Trust? A Charitable Lead Trust makes payments to a charitable organization for a defined period of time. Then the trust’s remaining assets are distributed to either you or your chosen loved ones at the end of the trust term. If the principal reverts to the donor, he or she gets a charitable income tax deduction; if to another, that person gets a charitable gift tax deduction.
Benefits of Giving a Charitable Lead Trust
- You support a charitable institution you love while also making sure your family is taken care of after your lifetime.
- The gift qualifies for gift or estate tax savings based on the current value of the income paid to the PineBelt Foundation over the trust term.
- You qualify for a gift tax deduction for the present value of the annuity payments to the PineBelt Foundation.
- The annuity payments and the term of the trust can be specified in such a way so as to reduce or even eliminate the transfer taxes due when the principal reverts to your heirs.
- All appreciation that takes place in the trust goes tax-free to your heirs.
- You can use your available estate tax credit (consult with your financial advisor for the current applicable amount) to further reduce the taxes on transfers to your heirs.
- You can have the satisfaction of making a significant gift to The Greater PineBelt Community Foundation now that reduces the taxes due on transfers to your heirs later.
- Reduce gift & estate taxes on assets you pass to heirs
How to Give a Charitable Lead Trust
#1 – Contact your estate advisor or lawyer about establishing a Charitable Lead Trust.
#2 – Create a trust by transferring cash, marketable securities, or income-producing property to a trustee you select. The trustee may be one or more individuals, a bank, the PineBelt Foundation, or a combination of these.
#3 – Designate the PineBelt Foundation or a charitable fund in the Foundation as the beneficiary of income for a specified period of years or for a period of a specific person’s life. Upon completion of that period, the trust assets may revert to you or pass to persons you have designated in the trust instrument to receive them.
Types of Trusts – A unique feature of a charitable lead trust is that you may tailor the PineBelt Foundation’s income interest. A charitable lead trust can make payments in one of two ways:
Charitable Lead Annuity Trust – pays a fixed amount each year to your favorite charity or organization
Charitable Lead Unitrust – pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust’s assets go up in value, the payments to your favorite charity go up as well. On the other hand, if the assets decrease in value, so do the payments.
Please click here for a brochure on how to invest in your community with a gift of a Charitable Lead Trust.
For more information please contact your Professional Advisor or Theresa Erickson, Executive Director at contact@PineBeltFoundation.org or call 601.583.6180