Charitable Lead Trust
The charitable lead trust is an arrangement that provides a stream of income to Augustana College, usually for a number of years. At the end of the term, the trust assets either return to you (known as a grantor lead trust) or transfer to your beneficiaries, most often children or grandchildren (known as a nongrantor lead trust). Here we will discuss the grantor version.
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Grantor Charitable Lead trusts (Annuity or Unitrust)
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- At the end of the trust period, assets return to the grantor.
- A lead annuity trust distributes a fixed dollar amount to Augustana each year.
- A lead unitrust distributes a percentage of the annual value of the trust to Augustana; additional contributions are acceptable.
- Donor may claim a charitable income tax deduction but must pay taxes on income distributed to the charity each year.
What are the Benefits?
- Donor makes a generous gift to Augustana while retaining an asset for future use or to pass on to future generations.
- Donor may claim an income tax charitable deduction (but is liable for taxes on income distributed to the non-profit). This may be especially useful for donors who are in a much higher tax bracket the year the gift is made than they expect to be during subsequent years of the trust.
What's involved in setting it up?
To establish a grantor charitable lead trust, the donor:
- Executes a trust agreement. Augustana can provide you and your attorney with sample documents;
- Chooses a trustee for the trust (Augustana; a designated individual; a bank);
- Has the assets transferred to the trustee, who holds and manages them as an individual fund.
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If you would like to learn more about Charitable Lead Trusts and including Augustana in your estate provisions, please contact:
Scott Park, Assistant Vice President of Planned Giving
Augustana College
639 38th Street
Rock Island, IL 61201-2296
scottpark@augustana.edu
