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If you want to make an impact now at Guiding Eyes for the Blind and also provide for your family later, consider setting up a charitable lead trust. You transfer cash or other assets to a trust that makes payments to Guiding Eyes for the Blind for a period of time. When the term is up, the remaining trust passes to your family or other beneficiaries you select.
There are two types of lead trusts—grantor lead trusts, and non-grantor lead trusts. Grantor lead trusts may be beneficial to individuals who have a very significant, atypical influx of income within a tax year (see example below). Non-grantor lead trusts might be attractive to those whose significant wealth would otherwise expose them to estate or gift tax when transferred to family or others.
A charitable lead annuity trust pays a fixed amount each year to Guiding Eyes and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year to Guiding Eyes based on the value of the assets in the trust. With a unitrust, if the trust's assets go up in value, for example, the payments to Guiding Eyes go up as well.
George would like to support Guiding Eyes and provide for his children. George received a windfall amount of income and needs a large income tax deduction to offset the income. Following his advisor's recommendation, George funds a grantor charitable lead annuity trust with assets valued at $1,000,000. George's trust pays $70,000 (7% of the initial fair market value) to Guiding Eyes each year for 15 years, which will total $1,050,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $955,700. Assuming the trust earns an average 6% annual rate of return, George receives approximately $767,240 at the end of the trust term.
*Based on a 1.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
Submit a few details and see how a charitable lead trust can benefit you.
Legal name: Guiding Eyes for the Blind, Inc.
Address: 611 Granite Springs Road, Yorktown Heights, New York 10598
Federal tax ID number: 13-1854606
See which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From Two Ways to Donate.View My Guide