Provide for Your Loved Ones and DSJ
Do you want to benefit from the tax savings that result from supporting DSJ, yet you don’t want to give up any assets that you’d like your family to receive someday? You can have it both ways with a charitable lead trust (You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the gift tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost).
There are two ways charitable lead trusts make payments:
A charitable lead annuity trust pays a fixed amount each year to DSJ and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust’s assets go up in value, for example, the payments to DSJ go up as well.
Check Out This Potential Scenario
George would like to support DSJ and provide for his children. Following his advisor’s recommendation, George funds a charitable lead annuity trust with assets valued at $800,000. George’s trust pays $56,000 (7 percent of the initial fair market value) to DSJ each year for 15 years, which will total $840,000. After that, the balance in the trust goes to his children. His gift tax deduction is $698,488* against the $800,000 of assets. Therefore only the difference ($101,512) 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 $800,000 outright to his children, it would have been a taxable gift.
*Assuming annual payments and a 2.4 percent charitable midterm federal rate.
Learn How to Fund It
You can use the following assets to fund a charitable lead trust:
Calculate Your Benefits
Submit a few details and see how a charitable lead trust can benefit you.
Next Steps
Contact Stewardship Office at (408) 983-0250 or carlos.proano@dsj.org for additional information on commercial annuities.
Seek the advice of your financial or legal advisor.
If you include DSJ in your plans, please use our legal name and federal tax ID.
Legal Name: (LegalName)
Address: (LegalAddress)
Federal Tax ID Number: Please contact us for our federal tax ID number.
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.