Charitable Lead Trust

How it Works

 

  • You contribute securities or other appreciated assets to a charitable lead trust.

  • The trust makes annual payments to the Incarnate Word Academy Foundation for a period of time.

  • When the trust terminates, the remaining principal is paid to your heirs.


Benefits

 

  • Income payments to Incarnate Word Academy for a term of years reduce the ultimate tax cost of transferring an asset to your heirs.

  • The amount and number of years of the payments to the Foundation can be set to reduce or even eliminate transfer taxes due when the principal reverts to your heirs.

  • All appreciation that takes place in the trust goes tax free to the individuals named in your trust.


Charitable Lead Trust: The Details

You greatly reduce or avoid gift and estate tax on trust assets passing to family if some trust income goes to charity for a few years.

Is this gift right for your?

 

A charitable lead trust is for you if…

 

  • You hold appreciating assets that you want to pass on to the next generation.

  • You want to reduce your gift and estate taxes.

  • Your planning objective is to preserve the value of your estate, not increase your income or reduce your income tax.

  • You are looking for techniques that will give your family more of your estate over a longer period of time.

  • You want your gift to provide a stream of income to the school.

 

The charitable lead trust pays income to the Incarnate Word Academy Foundation now, while reducing your tax costs for transferring assets to your heirs. The charitable lead trust holds appreciating assets for your lifetime or for a term of years and pays annual income to Incarnate Word Academy Foundation. The school benefits from the assured income stream from the lead trust, while your family enjoys several tax advantages:

 

  • The gift assets placed in the charitable lead trust are frozen in value for transfer tax purposes as  of the date the trust is formed. When the trust terminates and the assets pass to your family, all intervening appreciation will escape gift and estate tax.

  • Your income interest further reduces the taxable value of the trust assets when they pass to your family. This feature makes the charitable lead trust especially useful if you are holding assets likely to appreciate significantly before they are transferred to the next generation.

Please contact the IWA Advancement Office at (361) 883-8229 or Sister Martha Ann Snapka
at (361) 877-1232 so that we can assist you through every step of the process.