Charitable Lead Trusts
Gift Example
The example below is based on a factor that changes monthly. Request for a personal gift illustration based on the latest rates.
Assume that you use appreciated property with an average cost basis of 50 percent to fund a $2 million charitable lead annuity trust (CLAT) that makes a 6 percent annuity payment ($120,000) to Woodland Healthcare Foundation for 15 years, after which the trust principal reverts to your grandchildren in a generation-skipping transfer. Assume also that your gross estate is currently $10 million, you have made no previous taxable transfers, you are in the 35 percent federal income-tax bracket, and the state income-tax for trusts is 2.5 percent. Assume further that your average total investment return is 7 percent over the 15 year term. A 2.4 percent IRS discount rate is used to calculate the value of the remainder interest to your heirs.
| |
CLAT |
Without Trust |
| Gross principal |
$2,000,000 |
$2,000,000 |
| Net principal placed in plan |
$2,000,000 |
$2,000,000 |
| Benefit to family |
$2,000,000 |
$2,846,692 |
| Benefit to Woodland Healthcare Foundation |
$2,100,000 |
$0 |
| Total taxes |
$0 |
$2,339,561 |
| Click here to calculate your charitable lead annuity trust benefits |
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