What is a Charitable Lead Trust?
1) Assets valued at $500,000 or more are contributed irrevocably to a trust. The donor chooses the term of the trust and other specifications. 2) A fixed percentage of either the trust’s initial or annually determined value is paid to Cornell. 3) When the trust term ends, the remaining assets, including any appreciation in the assets, returns to either the donor or (more often) to designated heirs. There are two basic types of Charitable Lead Trusts: a grantor trust and a non-grantor trust. What are the benefits of a non-grantor Charitable Lead Trust? Most often, donors will establish a non-grantor trust that passes assets to heirs. In doing so, the donor is making a gift in the future to the heirs – as well as a charitable gift of the income stream paid from the trust. Benefits of a non-grantor Charitable Lead Trust: • The taxable value of the gift to heirs is reduced or discounted, because the heirs will not actually receive it until some time in the future. • The taxable value of th
If you have a large estate and are looking for ways to pass more on to your heirs, a Charitable Lead Trust may be an excellent plan for you. A Charitable Lead Trust is a gift plan that allows you to transfer assets to future generations at a significantly reduced gift or estate tax cost, while providing a stream of income to Columbia for a term of years. The technical name for this type of Charitable Lead Trust is a “Non-Grantor Charitable Lead Annuity Trust” as it leads with a stream of fixed annual payments to the University before the assets revert to non-charitable beneficiaries other than the grantor. Example Assume that you use appreciated property with an average cost basis of 50% to fund a $2 million Charitable Lead Annuity Trust (CLAT) that makes a 6 percent annuity payment to Columbia for 15 years, after which the trust principal reverts to your grandchildren in a generation skipping transfer. Assume also that your gross estate is currently $10 million, you have made no previ
The Charitable Lead Trust (CLT) is a powerful way to make a future transfer of assets to you heirs at a significantly reduced gift and estate tax cost, while supporting Amnesty International with the income during the term of the trust. During a specified number of years, an annuity or a fixed percentage of the trust assets is paid to Amnesty International USA. At the end of the trust term, the assets are passed to the beneficiaries you name. You can choose the trustee. Charitable Lead Trusts are usually funded with assets in excess of $500,000.
