CHARITABLE TRUSTS

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Charitable Lead Trust

Charitable lead trusts (CLTs) are simple in concept but are complex gift – and estate-planning devices due to the many technical drafting requirements of the IRS. We recommend you consult with an attorney who specializes in trusts and estates with experience in CLTs.

A Non Grantor Charitable (anchor link) Lead trust created during life does not provide you with a charitable income tax deduction, but you are also not taxed on any of the income earned by the trust. At the end of the trust term, the assets are distributed to the beneficiaries of the trust.

The principal advantage of the non-grantor lead trust is that it can significantly reduce or even eliminate (depending on when it is set up) the gift and estate taxes on the value of the assets used to fund the trust because of the charitable gift- and estate-tax deduction attributable to the value of the payments the Northshore Schools Foundation is to receive from the trust. (The longer the term of the trust and the greater the amount of the payments to the Northshore Schools Foundation, the larger the charitable deduction would be.) In addition, any appreciation in the trust’s value will avoid transfer (gift and estate) taxes when the assets are received eventually by the beneficiary (ies).

There is no minimum gift amount for a donor to establish a charitable lead trust for the Northshore Schools Foundation, and the investment of a charitable lead trust shall be determined by the fiduciary hired to manage the trust. No representation shall be made by a Northshore Schools Foundation employee or person acting on behalf of Northshore Schools Foundation as to the management or investment of such trust. The costs incurred for set up will be borne by the donor and the Northshore Schools Foundation will not pay for management fees.

A grantor lead trust ( anchor Link) provides a donor with a charitable income tax deduction for the present value of the payments that the Northshore Schools Foundation is to receive from the trust for a specified period of time. The donor, however, continues to be taxed on the income earned by the trust each year—including the amount distributed to the Northshore Schools Foundation. (To avoid this negative tax result, donors often fund grantor lead trusts with tax-exempt securities.) At the end of the trust term, the assets are returned to the donor.

Gifts of Non Grantor Lead Trust

How It Works


1. Create trust agreement stating terms of the trust (usually for a term of years) and transfer cash or other property to trustee.
2. Trustee invests and manages trust assets and makes annual payments to the Northshore Schools Foundation.
3. Remainder is transferred to your heirs.

Benefits


• Annual gift to the Northshore Schools Foundation
• Future gift to heirs at fraction of property’s value for transfer-tax purposes
• Professional management of assets during term of trust
• No charitable income-tax deduction, but donor not taxed on annual income of the trust

Next Steps


Contact us to learn more about this gift plan or other options (link to Contact Us)

Grantor Lead Trust

How It Works

1. Create trust agreement stating terms of the trust (usually for a term of years), transfer cash or other property to trustee, and receive an income-tax deduction
2. Trustee invests and manages trust assets and makes annual payments to the Northshore Schools Foundation
3. Remainder transferred back to you

Benefits

• Annual gift to the Northshore Schools Foundation
• Property returned to donor at end of trust term
• Professional management of assets during term of trust
• Charitable income-tax deduction, but you are taxed on trust’s annual income

Next Steps

Contact us to learn more about this gift plan or other options

Please note that no information on this website should be considered as the rendering of legal, accounting or other professional advice. Please consult your personal tax and financial advisors before implementing a planned gift to charity, including the Northshore Schools Foundation. These investment options may have specific consequences for your estate planning. As always, we would be pleased to discuss in confidence how your gift can impact Northshore students.