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Planned Giving:  Charitable Lead Trust

A charitable lead trust is an effective technique available to pass wealth to the next generation with a minimum of transfer taxes.  A Charitable Lead Trust can be created during the donor's lifetime or by a will  with a gift of $500,000 or more.  Your gift is placed in the lead trust for a fixed period of years, often 15 to 25.  The annual payments from the lead trust support the area of the Seminary designated by the donor.  Payments may be a fixed amount as in an annuity trust or a fixed percentage of the value of the trust as in a unitrust.  When the time period ends, the remaining principle is returned to the individuals named by the donor, typically family heirs. 

To further illustrate

A donor makes a $1 million gift to New Orleans Seminary to establish a charitable lead annuity trust.  Over a 20 year period, if the trust averages 10% return, and pays out 7 percent of the original trust per year, NOBTS will receive $1,400,000 by the end of the 20-year term, and the heirs will receive $2,716,548 tax free.  By comparison, over the same 20-year period, the $1 million would have appreciated in value to $5,512,669 (assuming the average annual return after taxes of 8.91 percent).  However, when the non-donor dies, estate taxes of $3,031,968 (at 55 percent) must be paid on this amount, leaving $2,480,701 for the heirs.  See the Chart

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New Orleans Baptist Theological Seminary
Office of Development
3939 Gentilly Blvd.
New Orleans, LA  70126

1-800-662-8701, ext. 3252
development@nobts.edu