Planned Giving

Charitable Lead Trust

Giving back to community and your loved ones.

A Charitable Lead Trust helps you remove assets from your estate and build a charitable fund with your community foundation during the trust's term. When the trust terminates, the remaining assets are transferred to you or your heirs, often with significant transfer-tax savings.

You transfer assets into a trust, which pays The Community Foundation an annual amount to build a charitable fund. During its term, the trust can be managed expertly by experienced professionals, which may help your trust investments grow over time. When the trust terminates, either upon your death or after a specified number of years, its final assets are transferred to those you designate; any growth in the trust passes to recipients, often with significant transfer-tax savings.

A Charitable Lead Trust entitles you to a number of financial benefits. It shelters investment earnings from tax, and it offers gift, estate, and generation-skipping tax benefits. For example, trust assets are removed from your estate for estate tax purposes. You may also capture future gift tax deductions. However, at the time your trust is established, you may owe gift tax on the present value of your gift to the final beneficiary.

You have several options when establishing your trust. You can create a Charitable Lead Trust during your life or through your will. The trust contributes to charity through your community foundation - either for a number of years or for your lifetime. And, you select one of two types of Charitable Lead Trusts. A Charitable Lead Unitrust makes annual distributions of a fixed percentage of the trust assets to the charitable fund you establish. If you create a Charitable Lead Annuity Trust, the charitable fund you establish will receive a fixed dollar amount each year.

Example: In October 2002, Bruce and Judy Homeyer moved from Charlotte, North Carolina where they had lived for 25 years to Jacksonville. After working in the textiles industry for DuPont Fibers for 43 years and as a consultant for five years, Bruce and his wife Judy, decided it was time to move closer to their family. Jacksonville was the ideal location because their children were located in Jacksonville, North Palm Beach, Florida, and Charleston, South Carolina. In addition, they both were attracted the climate, the river and the beach.

Bruce is a trustee of a family charitable lead trust created by his father. In a charitable lead trust transaction, a donor transfers property to a trust, which is established for a designated period of time. During that time, all income from the trust must be directed to one or more charitable organizations.

Bruce and Judy are very interested in supporting the nonprofit community in Jacksonville; but, as newcomers, were not well acquainted with the charitable options in their newly adopted home. After attending the Foundation's Philanthropic Summit, Lee Buchannan, their financial advisor at Bank of America, urged them to establish an advised fund at The Community Foundation with the income from their trust. Transferring the income from the trust to a Community Foundation advised fund would satisfy the charitable gift requirement and give them time to reflect on their core beliefs and values, design a giving program that reflects those beliefs and values, and learn more about the not-for-profit organizations in their new community. Also, they could rely on the giving expertise of The Community Foundation staff to assist them in this process.