Giving Later
Charitable Lead Trust
A Charitable Lead Trust is an exceptional way to transfer property to your children or other heirs at minimal tax cost
A Charitable Lead Trust is an exceptional way to transfer property to your children or other heirs at minimal tax cost. Its practicality and simplicity lets you pass assets to your family while at the same time making a gift to Maryknoll, and it reduces the possibility of estate taxes taking a large bite out of the assets you were planning to leave your heirs.
After Maryknoll receives income from the assets in the trust for a period of years, the principal goes to your family, with estate taxes reduced or even eliminated.
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Name: |
Paul and Margaret Bell |
| Age: |
74 and 69 |
| Situation: |
Want to transfer property to their children at minimal tax cost. |
| Gift Plan: |
Established a charitable lead trust. |
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Paul and Margaret Bell established a charitable lead annuity trust with appreciated securities worth $500,000 (purchased for $300,000). They directed that the trust pay the Fathers and Brothers $40,000 per year for 15 years. At the end of the trust term, the remaining trust assets are to be distributed to their children. Based on Treasury table calculations, the present value of the gift to Maryknoll (which is not tax deductible by the Bells) is valued at $368,965, and their children's remainder interest is valued at $131,035.
The trust was arranged so the surviving spouse could collect the annual income from the trust for life. If on the second spouse's death the trust assets have appreciated to $1,000,000, only the value of the gift to their children at the time the trust was created ($131,035) will be been subject to gift tax. The balance of $868,965 ($1,000,000 less $131,035) will escape gift and estate tax. In addition, none of the $1,000,000 will be includable in the Bell's estate for estate tax purposes.
Case Studies are composites of Maryknoll Donors. The names and images are fictional but the cases use real data and situations. Figures are for demonstrational purposes only. |
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