Is your church in a capital campaign? Do you make recurring gifts each year to missions organizations, childcare ministries, your Baptist college alma mater or other charitable causes?
Would you be interested in making those gifts in a way that coordinates that giving over the next few years with a tax-saving way to transfer assets to your family?
If so, consider a charitable lead annuity trust (“CLAT”).
A CLAT is a legacy giving plan that pays a fixed income stream to one or more charitable causes for a designated period of years. At the end of the term of years the remainder of the CLAT can either be returned to you (“Grantor CLAT”) or be distributed to your children and/or other family members (“Non-Grantor CLAT”).
While creating a Non-Grantor CLAT does not entitle you to a charitable income tax deduction, it does provide a way to pass assets to your children or others at reduced gift and estate tax cost.
Gift tax savings come from the fact the tax value of the future gift to your family is the present value of the remainder interest in the trust, not the full value of what you place in the trust. With careful coordination of the fixed amount being paid to the charitable beneficiaries and the trust term you can reduce the present value of the remainder gift to family significantly.
Estate tax savings result from the removal of the asset, any subsequent appreciation and the future income it generates from your estate.
Leverage future asset transfers to family while providing recurring current gifts to charitable causes important to you by “giving an income stream” through a CLAT.
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.