Charitable Lead Trust
Protect Your Assets
You can benefit from the tax savings that result from supporting the Tri Sigma Foundation without giving up the assets that you'd like your family to receive someday with a donation in the form of a charitable lead trust.
There are two ways that charitable lead trusts make payments to the Foundation:
A charitable lead annuity trust pays a fixed amount each year to the Foundation and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust's assets go up in value, for example, the payments to the Foundation go up as well.
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An Example of How It Works
Jennifer would like to support the Foundation and provide for her children. Following her advisor's recommendation, Jennifer funds a charitable lead annuity trust with assets valued at $2,500,000.
Jennifer's trust pays $175,000 (7 percent of the initial fair market value) to the Foundation each year for 15 years, which will total $2,625,000. After that, the balance in the trust goes to her children. Assuming a 6 percent investment return, the children will receive approximately $1,918,101.
Her gift tax deduction is $2,317,400* against the $2,500,000 of assets. Therefore, only the difference ($182,600) is subject to gift tax, which is offset against her lifetime gift tax exclusion. After that, the remaining trust assets and all of their growth will pass to her family at zero additional cost in gift and estate taxes. Had Jennifer given the $2,500,000 outright to her children, it would have been a taxable gift.
*Assuming annual payments and a 3.2 percent charitable midterm federal rate.
Calculate Your Benefits
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- Contact Chris Smithhisler at (317) 373-1347 or email@example.com to talk about supporting the Foundation by setting up a charitable lead trust.
- Seek the advice of your financial or legal advisor.
- If you include the Foundation in your plans, please use our legal name and federal tax ID.
Legal Name: Sigma Sigma Sigma Foundation
Address: 225 North Muhlenberg Street, Woodstock, VA 22664-1424
Federal Tax ID Number: #52-1370798
Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.