Charitable Lead Trusts

If ALL of following describe you…

  • has substantial wealth (let’s say, a single person whose estate is worth a fair amount over $1.5 million, or a married couple whose estate is worth a fair amount over $3.0 million);
  • does not have a strong need for all the income coming in;
  • wants to support Campbell, but also wants the MAXIMUM amount of wealth to descend to children or grandchildren;

…then you SHOULD consider setting up a charitable lead trust! 

When you transfer assets to a charitable lead trust, the trust pays an income stream from the trust assets to Campbell, each year during the term of the trust.  When the trust term expires, the assets of the trust are transferred to your children or grandchildren.  For federal gift tax purposes, the actual value of the assets transferred to this trust – which eventually go to your children or grandchildren – is heavily “discounted” by the estimated value of the income stream to Campbell over the term of the trust.   

Here’s an example:  a couple, ages 65, transferred $1.0 million to a lead trust lasting the rest of their lives and paying 5% to charity (about $50,000 each year) – and even though their children will actually receive $1.0 million plus when the trust ends, the “gift tax” value of the transfer, however, was only $370,000, against which this couple set their federal credit against gift taxes, incurring no out-of-pocket gift taxes and having a lot of gift tax credit left over!    

Features of this gift plan include:

  • Ease – An estate planning attorney can draft a charitable lead trust for you.
  • Control – in your lead trust document, you can specify how the income from your trust is to be used by Campbell; you can also choose the rate of income Campbell is to receive between 5% and 7%, the term of the trust (your lifetime, or just a term of years), and which members of your family will eventually receive the trust assets.
  • Income tax reduction – the income earned by the type of lead trust we recommend is not taxable to you.
  • Estate tax savings – not only are the assets transferred to your lead trust out of your estate – along with any future appreciation on them – reducing your estate tax liability; but you have also transferred them to your children at a fraction of the “transfer tax” cost.
  • Larger gifts possible – a wonderful stream of income goes to support Campbell during each year of the trust.

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