Charitable Lead Trusts

Goal: Pass assets to heirs at potential tax savings
Benefit: Charitable tax deduction, favorable estate tax circumstances
Diagram

Phil and Alicia had a successful business developing both residential and commercial real estate. One of their first charitable gifts had been a gift of appreciated stock. They realized that their assets provided more income than they need for their current family living expenses but that they wanted to maintain their assets to be sure their grandchildren would have the resources for their college educations.

Phil: "It really has been a wonderful ride. When we first started developing residential housing, we had no idea where it would all lead. We were fortunate to make some choices that really set up the company for success. It's grown beyond our wildest dreams."

Alicia: "We have been able to provide a wonderful home for our children, but they are off on their own now with their own families. While the company has grown, our immediate needs have shrunk."

Phil: "Not too long ago, we sat down with our kids and our advisors and talked about what was important to us and what we really wanted. Our kids are all doing fine on their own. We certainly don't need more. Our attorney told us about something called a charitable lead trust funded with some of our excess assets."

Alicia: "It sounded great to us - some tax benefits, our estate remains intact for our grandkids' education and, not only are we making a difference in other peoples' lives, we're able to do it while we're here and can be part of it. It really feels good to see firsthand what the income from trust means for an organization that has meant so much too us!"

Phil and Alicia wanted to contribute $1 million to support public broadcasting. They placed a sufficient amount of income producing commercial property to make annual payments of $100,000 over ten years. This will provide their station with $1 million in total and after ten years, the assets will pass to the donor's heirs. Because the gift tax deduction and the amount subject to estate tax is determined at the time the assets are contributed to the CLT, any appreciation of the assets that takes place during the term of the trust is not subject to additional gift or estate tax.

The Charitable Lead Trust (CLT) is a powerful way to make a future transfer of assets, especially assets expected to appreciate in value, to your heirs at a significantly reduced gift and estate tax cost while also providing WFSU with income. During a specified number of years, the lives of one or more individuals, or a combination of the two, income from the trust is paid to WFSU. A lead trust may be structured to provide a fixed dollar contibution annually (CLAT) or a fixed percentage contribution (CLUT). At the end of the trust term, the assets pass to the beneficiaries named by the donors. The donors also choose the trustee.

As we said earlier, there are as many ways to support WFSU as there are needs for your support. Please contact us should you have questions or if you would like to discuss your personal circumstances to see how you can enrich your heart as many others already have. The following page has some further thoughts about joining the family of support for WFSU. Or return to the Planned Giving homepage.

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Important note, individual financial circumstances will vary. The information on this site does not constitute legal or tax advice. Donor stories and photographs are for purposes of illustration only. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. Use of this site signifies your agreement with the terms of use. The content in this Planned Giving section has been developed for WFSU by Future Focus. Please report any problems to section webmaster. Revised: July 21, 2016 22:09.