Charitable Lead Trusts

Charitable lead trusts provide a means to make a gift over time to Northwest Christian Community Foundation, and at the end of the trust term, distribute the remaining trust assets to children or grandchildren with significant savings on estate and gift taxes.  [Example]

• Reduce or eliminate transfer taxes on assets passed on to loved ones.
• Receive gift and estate tax deductions.
• Provide an income stream to Northwest Christian Community Foundation for a period of time.

For more information about charitable lead trusts, contact us at office@nccf4christ.org or phone at 503-892-6264.  Financial and tax deduction calculations, customized gift plan proposals and counsel are available at no charge or obligation.

Example

A charitable lead trust is a way to make a gift to Northwest Christian Community Foundation over a period of years, and at the end of the trust term, distribute the remaining funds or the gift assets to your heirs with significant savings on estate and gift taxes.

Under this plan you irrevocably transfer assets to Northwest Christian Community Foundation as trustee and provide that payments be made to NCCF for a certain number of years.  Then the principal is distributed to your children or grandchildren at greatly reduced gift and estate tax rates - and sometimes escapes tax altogether. 

Why does a lead trust save gift and estate taxes?

When you create a lead trust, only the present value of the remainder interest (the value of the amount remaining for your heirs when the trust ends) will be subject to tax.

Edna wants to provide support NCCF.  Edna funds a lead trust with $500,000 and stipulates that NCCF is to receive $40,000 per year for 15 years, after which the remaining principal will be distributed to her two children.  She will report a taxable gift of only $22,485.  The difference ($500,000 – 22,485 = $477,515) is a charitable gift tax deduction.  If she had simply given $500,000 to her children, the entire amount would have to be reported to the IRS and may lead to the imposition of a gift tax.

* Note – for gift tax purposes, there is an annual exclusion amount of $13,000, and a lifetime exclusion amount of $1,000,000.

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