| |
| Agreements |
 |
Charitable Lead Trust
You transfer
assets to a trust, which then makes payments to the College for a period of years. After
that period, the assets are distributed to your heirs with reduced gift or estate tax.
These trusts are appropriate for large gifts.
A charitable lead trust benefits the College first: it makes payments for several years to Pomona and then terminates and distributes its assets to your heirs. It is a recognized technique for passing your assets to your heirs with significantly less estate tax liability than if you simply gave them the assets at the end of your life.
You usually don't receive a charitable deduction when you establish a charitable lead trust. Instead, you benefit from a 50% or greater reduction in estate tax on the assets that fund the trust. While interest rates are low, the reduction in estate taxes is maximized.
Here is An Example:
"How Can I Preserve Assets For My Heirs?"
Mrs. Cunningham owns stock valued at $1,200,000 that she believes will increase in value significantly over the next few years. She would like the stock to pass to her family after her death but is concerned about the impact of estate taxes on her heirs. She is also interested in providing scholarship support to Pomona students.
Mrs. Cunningham decides to transfer the stock to a charitable lead trust that will pay 6.5%, or $78,000, annually to Pomona College for financial aid for a period of ten years. At the end of the ten-year period, the principal will be distributed to Mrs. Cunningham's three children.
In creating this trust, Mrs. Cunningham will report a taxable gift of only $609,000, since only the future value of the assets is subject to tax. If she had simply given the property to her children, the entire $1.2 million would be taxable.
Please contact us for more information on your particular situation.
· Return to Agreements | Pomona Plan Home | Contact Us
|
|
|
|
