You can pass assets to your family on a tax favorable basis while providing immediate support to benefit HIAS.
For those of you that are familiar with the more common Charitable Remainder Trust (CRT), a Charitable Lead Trust (CLT) is essentially a CRT in reverse. While a CLT is a split interest irrevocable trust like a CRT, the initial income stream from the CLT’s assets goes to HIAS first, and only after the trust has ended does the remainder interest revert back to the donor or is transferred to heirs. The type of deduction you receive is based on the type of trust and will ultimately depend on the type of planning you are trying to achieve. Typically, a CLT can be advantageous in transferring assets to family members of a younger generation.
HIAS’ lead interest can be in the form of a guaranteed amount each year (charitable lead annuity trust) or determined by a fixed percentage of the annually re-valued trust assets (charitable lead unitrust). If income is insufficient to make these payments, trust principal must be used to make up the difference. CLTs can yield significant estate and gift tax savings and can be appropriate for transferring appreciated property to family members at low gift and estate tax costs.
It is important to seek the guidance of your estate planning professional as the tax ramifications of lead trusts are complicated and varied.
If you want more information, please contact Sabine McMullen at 212 613-1366 or plannedgiving@HIAS.org.