Charitable Lead Trust (for Family)
If you are looking for a way to pass on some of your assets to your family while reducing or eliminating gift or estate taxes, a charitable lead trust is an excellent option.
Benefits of a charitable lead trust
- Receive a gift or estate tax charitable deduction
- Pass inheritance on to family at a reduced or zero cost
- Establish a vehicle from which you can make annual gifts to charity
How it works
- You make a contribution of your property to fund a trust that pays The Community Foundation of Herkimer & Oneida Counties income for a number of years
- You receive a gift or estate tax deduction at the time of your gift
- After a period of time, your family receives the trust assets plus any additional growth in value
Zero Tax Plan
You can set up a lead trust that allows you to transfer assets to your family with zero transfer taxes. The IRS assumes that a lead trust is only earning at the current low federal rate. If the actual investments of the trust produce a higher return than the payments made to the Community Foundation over the term of the trust, then the full value of the trust may be transferred to family with zero gift tax.
Family Limited Partnership/Lead Trust Plan
To discount your gift to family even more, you may consider first transferring your real estate or other assets into a Family Limited Partnership (FLP), which will fund your lead trust. The combination of the FLP, the lead trust and a gift exemption can permit the lead trust to pay income to our organization for a number of years and potentially transfer substantial assets tax-free to your family.
Increasing Payment Lead Trust
With increased volatility in the stock market, you may also want to consider creating a lead trust that makes fixed payments of increasing amounts to us over time. Because the payments to us are fixed, your family ultimately benefits from any growth in the trust. Low payouts in early years allow the trust to grow, thus allowing protection should the economy produce below-average returns in the future.
Grantor Lead Trust
A grantor lead trust permits you to transfer your cash or assets to a trust that will make gifts to charity for a number of years. At the end of the trust term, you receive the assets back from the trust.