A Charitable Lead Trust works just the opposite of a typical life income arrangement. Instead of the donor receiving income for a period of time and the principal then passing to the Seminary, it is the Seminary that receives income for a period of time, with the principal then being passed on to the donor's children, grandchildren, or others at greatly reduced federal gift and estate taxes, or free of them altogether. This form of Charitable Lead Trust is called a non-grantor lead trust. It has particular appeal to individuals with strong charitable intent in high gift and estate tax brackets. It does not, however, provide them with a charitable deduction for income tax purposes. Generation-skipping tax considerations should also be taken into account with regard to a non-grantor lead trust.
For those who prefer to have the trust assets back when the term of the trust ends rather than passing them along to others, there is an alternative known as a grantor lead trust. This arrangement allows the donor to make a sizeable gift to a charitable institution such as the Seminary for a number of years and then receive the trust principal back. He or she would receive a substantial income tax charitable deduction when the trust is created, but would also be subject to tax on all taxable income earned by the trust, including the payments made to the Seminary. As a result, investments earning tax-free income are an attractive alternative where grantor lead trusts are concerned.
Both non-grantor and grantor lead trusts are available in annuity trust or unitrust versions. The former would pay the Seminary a fixed dollar amount, while payout from the latter would be related to the fortunes of the market and, thus, be variable from year to year. These and other estate planning considerations highlight for donors the importance of consulting their own legal and financial advisors.
Those entering into lead trust arrangements with the Seminary would be invited to become members of the Legacy Society.
Seminary policy requires that all donors and beneficiaries be at least fifty years of age. A gift of one hundred thousand dollars or more is required.
For more detailed information about Charitable Lead Trusts or any other planned giving opportunity offered by the Seminary, please contact the Director of Planned Giving, Lisa Titus.