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Charitable Lead Trusts
A charitable lead trust can be used to transfer assets to children or others at a significantly reduced tax liability. The trust makes a fixed payment to Amherst College for a specified term, measured either by someone's life or a selected number of years. After the trust term ends, the assets of the trust are either returned to you or passed on to children or other loved ones. If the assets are to be returned to you, you receive an income tax deduction when the trust is created. If the assets are passed on to heirs, applicable estate or gift taxes on the value of the gift are reduced or completely eliminated. The tax savings from a charitable lead trust may allow you to provide significant support for Amherst at little or no cost to heirs in terms of ultimate inheritance.
A charitable lead trust may provide either a fixed “annuity” payment or a variable “unitrust” payment to the College. A climate of low interest rates make the annuity payment option attractive for donors as more assets may be passed on to heirs.
A charitable lead trust can be a powerful tool in gift and estate tax planning, but the technical complexities require careful consideration. Amherst's Office of Gift Planning is glad to work with you and your financial advisors to see if a charitable lead trust is the right plan for you.
EXAMPLE: You transfer $250,000 in long term appreciated property (assets you have held more than one year) to a non-grantor lead unitrust that pays 6.5% of its value each year to Amherst College for the lifetime of an individual, age 60.
1) You qualify for a federal gift tax deduction of approximately $174,527. Your deduction may vary modestly depending on the timing of your gift.
2) Amherst College receives payments in annual installments each year. In the first year, these payments will be approximately $16,250. Payments in future years will vary with the value of the unitrust.
3) The beneficiaries of your trust (for example, family members) will receive all of the trust's assets when the trust terminates. Any asset growth that occurs within the trust will be distributed to your trust's beneficiaries free of gift or estate tax.
4) Your gift will benefit from expert asset management, provided by the same professionals who manage Amherst College's endowment.
Information contained in this website should not be considered legal, accounting, or other professional advice. Individuals considering a planned gift to Amherst should consult with their financial advisor.