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.
Advantages
- Next Page
Next
|
|
