Charitable Lead Trusts
Discover which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From 2 Win-Win Ways to Donate.
Do you want to benefit from the tax savings that result from supporting Pitzer, yet you don't want to give up any assets that you'd like your family to receive someday? You can have it both ways with a charitable lead trust.
There are two ways charitable lead trusts make payments:
A charitable lead annuity trust pays a fixed amount each year to Pitzer and is more attractive when interest rates are low.
A 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, for example, the payments to Pitzer go up as well.
Check Out This Potential Scenario
Deborah would like to support Pitzer and provide for her children. Deborah received a windfall amount of income and needs a large income tax deduction to offset the income. Following her advisor's recommendation, Deborah funds a grantor charitable lead annuity trust with assets valued at $1,000,000. Deborah's trust pays $70,000 (7 percent of the initial fair market value) to Pitzer each year for 15 years, which will total $1,050,000. After that, the balance in the trust reverts back to Deborah. SHe receives an income tax charitable deduction of $854,311. Assuming the trust earns an average 6 percent annual rate of return, Deborah receives approximately $767,240 at the end of the trust term.
This information assumes annual payments and a 2.4 percent charitable midterm federal rate.
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.