Charitable Lead Trust
Taxes can consume a considerable amount of an estate, reducing the inheritance for your children or grandchildren by a heart-breaking amount. Overcome this difficulty through charitable lead trusts, which offer a way to make a philanthropic gift while protecting your wealth for future generations.
A donor creates a charitable lead trust by transferring ownership of an asset to a trust. The trust gives the income, or a percentage of the income, to Manhattan College each year for a period of years, or for your lifetime. At the end of the period of years, the trust assets are given back to the donor or to named beneficiaries. The lead trust typically is used with assets with a potential for continued high appreciation. The trust permits the assets to be transferred to other family members at a low transfer cost. Utilizing the lead trust, the donor may leave a significantly larger inheritance to his or her heirs than he or she could have left via a will or other trusts.
Charitable Remainder Annuity Trust
Charitable remainder annuity trust pays income for life for up to two people. When you establish the annuity trust you transfer cash or property to the trust in return for a fixed dollar amount payment. In this way, you obtain a stable income that is not subject to market fluctuations. For example, if John Jasper establishes an annuity trust with $100,000 and wishes to receive 5% of the trust’s value as income, he will receive payments of $5,000 for life, or for 20 years, regardless of the value of the trust. Upon his death, all principal and undistributed income is transferred to the College.
Benefits of an Annuity Trust
- Stable income
- A current income tax charitable deduction that can be carried forward for five years
- Bypass of the penalty gains tax on the sale of the appreciated assets
- Estate tax savings
Charitable Remainder Unitrust
Charitable Remainder Unitrust pays income for life for up to two people. When you establish a charitable remainder unitrust, you transfer cash or property to the trust. You then decide what percentage of the fair market value of the trust assets you wish to receive as income. For example, John Jasper donates $100,000 in cash to a unitrust and wants to receive an income of 5% of the annual valuation of the unitrust. The first year income payment will be $5,000. If the value of the trust increases, so will the income payment. On the other hand, if the value of the unitrust decreases, John Jasper will still receive 5% income but the payment will be less. Upon his death, all principal and undistributed income is transferred to the College.
Benefits of a Unitrust
- Increased current income
- A generous income tax charitable deduction that can be carried forward for five years
- Bypass of the penalty capital gains tax on the same of appreciated assets
- Estate tax and probate cost savings
To establish a trust, please contact Mary Ellen Malone at 718-862-7976 or firstname.lastname@example.org.