Charitable Lead Trust (CLT)

  • “Loan” assets (and income) to charity for a term of years or for life.
  • Receive accelerated income tax deduction or significant estate tax benefits.

Charitable Lead Annuity Trust

Lois Fernandez is a 65-year-old widow with three adult children. Due to their investment acumen, Lois now has a net worth of about $10 million, and that is growing, so more than half of her estate will be subject to estate taxes, under the current rules. Lois owns a self-storage property, currently worth $1 million. Lois may use this asset to establish a 10%, ten year Charitable Lead Annuity Trust. Cash flow from the Property will pay $100,000 per year to the United Way foundation for the next ten years for a total of $1 million to the endowment. At the end of ten years, the self-storage property will pass to Lois’s three children. Because the value of the property grows free of gift and estate taxes, the series of ten $100,000 distributions to the United Way Foundation actually increase the amount received by Lois’s children from her estate by more than $250,000.

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