Charitable Lead Trusts

The charitable lead trust is the opposite of the charitable remainder trust.  Income is paid to United Way during the term of the trust, after which the assets are transferred back to you or to your heirs.

1. Non-Grantor Lead Trust
   
   The most beneficial arrangement is where the trust instrument provides for income to be paid to United Way for a period of years, after which the assets are distributed to those you designate, usually your children or grandchildren. While you may be liable for a gift tax when the trust is created, all appreciation on the assets passes to your heirs without incurring additional tax. During the trust term, income generated by the trust is not included in your taxable income.

2. Grantor Lead Trust
   
   In this arrangement, the income is paid to United Way for the life of the trust, and then the assets are distributed to you and/or your spouse. When you create the trust, you will receive an income tax charitable deduction based upon the present value of the stream of income that United Way will receive during the trust term. Income generated by the trust is included in your taxable income.

In either case, the trust can be either a unitrust or an annuity trust, as with the remainder trusts.

For more information, please contact Eric Harrison at 707.528.4485 x112.