How it works
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You contribute cash, securities, or other assets to a Lead Trust. |
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The Trust makes fixed annual payments to Wentworth for a specified term of years, or for your lifetime. |
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When the Trust ends, the remaining balance goes to the beneficiaries of your choice, such as your children or grandchildren. |
What is a Charitable Lead Trust?
Estate, gift, and generation-skipping taxes can consume 50%-70% of a large estate, which tremendously reduces your children's (or grandchildren's) inheritance. You can overcome this difficulty through a Charitable Lead Trust.
The main advantage of a Lead Trust is that it is possible to make a large asset transfer to your heirs tax-free, while also benefiting Wentworth. In addition, any appreciation that takes place inside of the Trust goes tax-free to your heirs. This makes a Lead Trust a powerful wealth transfer tool.
We are happy to work with your legal and financial advisors to explore the benefits of a Lead Trust and to help you determine if it is the best giving method for your situation.
The minimum donation to create a Lead Trust is $1,000,000.
Benefits
- Any growth that takes place in the Trust goes to your heirs tax-free.
- You can adjust the payments to Wentworth and the term of the Trust to reduce (or even eliminate) the transfer taxes that are due when the principal goes to your heirs.
- You qualify for a gift tax deduction for the payments that are made to Wentworth.
- You can use your available estate tax credit ($2.0 million per person beginning in 2006) to further reduce taxes on transfers to your heirs.
- Your gift will benefit Wentworth now, and will benefit your loved ones later.
- You will become a member of Wentworth's Giving Society.
An illustration
Jack and Jennifer Hull would like for their grandchildren to inherit $10,000,000 from their estate. They know that if their children receive the estate, the $10,000,000 inheritance is reduced to $5,200,000 by the 48% federal estate tax. Furthermore, if the Hulls' grandchildren inherit the $10,000,000, they are subject not only to the initial 48% tax rate, but also to a 48% generation-skipping tax. The federal government would keep almost $7.3 million of the grandchildren’s inheritance, and the grandchildren would only receive the remaining $2.7 million.
This can be avoided through a Charitable Lead Trust. Through such a plan, Jack and Jennifer can make a generous gift to Wentworth that is free of estate and gift taxes, and which will also protect their assets.
They transfer the assets to a Lead Trust, and their trustee then invests the assets. The Trust will generate income, which pays Wentworth a percentage of the assets for the rest of Jack and Jennifer's lives (or for a set number of years). At the end of the term, the remainder of the Trust, which has grown in value, passes to their grandchildren free of estate and gift taxes. |
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Please note that information and calculations are for illustration purposes only and should not be considered legal, accounting, or other professional advice. Your actual benefits may vary depending on the timing of the gift.
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