Charitable Lead Trusts

Charitable lead trusts are trusts that pay an income stream to Whitman College and either the donor or another beneficiary will retain the remainder value in the trust.

This type of trust is especially useful for people who want to leave a constant stream of income to the college, but would like their children or other loved ones to receive the principal that is left. Because of the dynamics of the trust, the principal can typically be left to children or grandchildren without being subject to either estate or gift tax. This is an enormous advantage to people who would like to transfer large sums of money from one generation to another without having to pay gift tax. It is important to note that although the current tax law will provide for the elimination of the estate tax in 2010, the gift tax will never be repealed.

Because charitable lead trusts are typically the most complicated form of planned giving, we stress the use of either the Whitman Gift Planning Officer or your own financial advisors to determine the tax deductibility and payout rates needed to distribute assets to you and your beneficiaries in the future.

Charitable lead trusts come in four major forms:

Charitable non-grantor lead annuity trust: in this trust the payments to the college are constant and unwavering and the remaining principal in the trust will be given to a beneficiary other than the original donor.

Charitable grantor lead annuity trust: in this trust the payments to the college are constant and unwavering and the remaining principal in the trust will go back to the donor.

Charitable non-grantor lead unitrust: in this trust the payments to the college will be based on the current fair market value of the trust assets and will fluctuate from year to year. In addition the remaining principal in the trust will be given to a beneficiary other than the original donor.

Charitable grantor lead unitrust: in this trust the payments to the college will be based on the current fair market value of the trust assets and will fluctuate from year to year. In addition the remaining principal in the trust will go back to the donor.

More information on Charitable Non-Grantor Lead Annuity Trusts
Example of Charitable Non-Grantor Lead Annuity Trust

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