Charitable Lead Trusts
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This type of gift arrangement allows you to direct current gifts to Colorado State University for a specified period of time and, in turn, receive a reduction in gift or estate taxes on assets you wish to pass to heirs. This can be an excellent gift option if you own a valuable asset that you want to keep in the family, you expect will appreciate in value, and that currently produces income. There are two types of charitable lead trusts:
A charitable lead unitrust (CLUT) pays a variable amount each year based on the value of the assets in the trust. With a CLUT, the payout to CSU may fluctuate depending on the asset value in the trust. At the termination of the CLUT, like a charitable lead annuity trust, the return of principal to you or your heirs is allowed.
A charitable lead annuity trust pays a fixed amount each year to CSU and, at termination of the trust, allows the return of principal to you or your heirs.
An Example of
How it Works
George would like to support CSU and provide for his children. Following his advisor's recommendation, George funds a charitable lead annuity trust with assets valued at $2,500,000.
George's trust pays $175,000 (7 percent of the initial fair market value) to CSU each year for 15 years, which will total $2,625,000. After that, the balance in the trust goes to his children. Assuming a 6 percent investment return, the children will receive approximately $1,918,101.
His gift tax deduction is $2,182,775* against the $2,500,000 of assets. Therefore, only the difference ($317,225) is subject to gift tax, which is offset against his lifetime gift tax exclusion. After that, the remaining trust assets and all of their growth will pass to his family at zero additional cost in gift and estate taxes. Had George given the $2,500,000 outright to his children, it would have been a taxable gift.
*Assuming annual payments and a 2.4 percent charitable midterm federal rate.
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- Complete the Statement of Intent form to let us know of your gift intentions and to ensure peace of mind that your gift will have the desired impact at CSU.
- Contact the Office of Gift Planning at firstname.lastname@example.org or (970) 491-3414 for additional information.
- Seek the advice of your financial or legal advisor.
- When including CSU in your plans, please use our legal name and federal tax ID.
Legal Name: Colorado State University Foundation
Location: PO Box 1870, Fort Collins, CO 80522
Federal Tax ID Number: 23-7098397
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.