Provide for Your Loved Ones and the School of Medicine or Stanford Health Care
Charitable Lead Trusts
Do you want to benefit from the tax savings that result from supporting the School of Medicine or Stanford Health Care, 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.
There are two ways charitable lead trusts make payments:
A charitable lead annuity trust pays a fixed amount each year to the School of Medicine or Stanford Health Care 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 the School of Medicine or Stanford Health Care go up as well.
Check Out This Potential Scenario
George would like to support the School of Medicine or Stanford Health Care and receive tax benefits. George received a windfall amount of income and needs a large income tax deduction to offset the income. Following his advisor’s recommendation, George funds a grantor charitable lead annuity trust with assets valued at $1,000,000. George’s trust pays $60,000 (6% of the initial fair market value) to the School of Medicine or Stanford Health Care each year for 15 years, which will total $900,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $614,445. Assuming the trust earns an average 8% annual rate of return, George receives approximately $1,600,286 at the end of the trust term.
*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
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