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Charitable Lead Trust

For donors interested in greatly reducing federal gift and estate taxes or possibly eliminating them altogether, a charitable lead trust might be the best planned giving vehicle to use. A charitable lead trust is opposite the typical life income arrangements of the charitable remainder trust and charitable uni-trust. The donor does not receive income for a period of time, but the income earned actually then comes to the Seminary. Upon the passing of the individual creating the charitable lead trust, the principal then passes on to the donor's children, grandchildren, or others. This form of charitable lead trust is called a non-grantor lead trust. It is of particular interest to individuals with charitable intent, but faced with possible high gift and estate taxes. There are no charitable deductions for income tax purposes with a lead trust.

Donors may prefer to have the trust assets back when the term of the trust ends. There is an alternative known as a grantor lead trust. Under this arrangement, the donor may make a sizeable gift to the Seminary for a number of years, e.g. 20 years, and then receive the trust principal back. By establishing a trust in this manner, the donor receives a substantial income tax charitable deduction when the trust is created. However, the donor would also be subject to tax on all taxable income, which is earned by the trust including the payments, made to the Seminary. A good investment strategy for charitable lead trusts is to place tax-free income instruments in the trust, thus eliminating the income tax exposure to the donor.

Seminary policy requires that all donors be at least 50 years of age. A gift of $500,000 or more is required to establish a lead trust. For more detailed information about charitable lead trusts, please contact Dale Melton .