Charitable Lead Trust

Giving Back to Community and Your Loved Ones

A charitable lead trust is a tax-advantaged instrument that allows you to use the income or capital growth of a particular asset to build a charitable fund over time while reserving the core asset for your heirs (or for your own future use).

You transfer assets into a trust, which pays the Grand Island Community Foundation an annual amount to build a charitable fund. During its term, the trust can be managed expertly by experienced trust professionals, which may help your trust investments grow over time. When the trust terminates, its final assets are transferred to those you designate. Any growth in the trust passes to recipients, often with significant transfer-tax savings.

A charitable lead trust entitles you to a number of financial benefits. It shelters investment earnings from tax, and offers gift, estate, and generation-skipping tax benefits. For example, trust assets are removed from your estate for estate tax purposes. You may also capture future gift tax deductions. However, at the time the trust is established, you may owe gift tax on the present value of your gift to the final beneficiary.

You have several options when establishing a trust. You can create a charitable lead trust during your life or through your will. The trust contributes to charity through the Grand Island Community Foundation - either for a number of years or for your lifetime. And, you select one of two types of charitable lead trust. A charitable lead unitrust makes annual distributions of a fixed percentage of the trust assets to the charitable fund you establish. If you create a charitable lead annuity trust, the charitable fund you establish will receive a fixed dollar amount each year.

Example Story

A Lifetime Gift for Two

Anne wanted to create a fund to support her favorite charitable interests for years to come. At the same time, she wanted to provide an inheritance for her daughter in a way that created the least tax burden. Her attorney told her that creating a charitable lead trust and designating the Grand Island Community Foundation as a beneficiary would allow her to give to the community now and provide for her daughter later. Using a regular distribution from the trust, Anne has already begun to build a fund at the Grand Island Community Foundation, which is, in turn, making grants to her community in areas important to her. The trust will continue to build the Anne Doe Family Fund until her death, after which the rest of the trust will transfer to Anne's daughter. By giving through a charitable lead trust, Anne is able to do more for both her daughter and her community. Plus, her estate will owe less in taxes.

Learn More

There is so much more we'd like you to know. For more information and ideas on ways to integrate charitable giving with your financial plan, ask your financial advisor or contact the Grand Island Community Foundation at (308) 381-7767 or online. We will be happy to work with you and/or your advisor to determine the most effective ways to accomplish your charitable goals.