Charitable Leads Trusts

Published On: 12/03/2018

Charitable leads trustHigh net worth couples looking to benefit a charity while reducing estate taxes and gifting to heirs with substantial valuation discounts may want to consider using a Charitable Leads Trust. This type of testamentary trust irrevocably transfers assets to the trustee upon the death of the surviving spouse.  The trustee then pays a fixed percentage of the trust assets to a qualified charity for a fixed number of years. When the term ends, the remaining trusts assets are distributed to the beneficiaries.

The present value of the charity’s future stream of income is a charitable deduction for estate tax purposes. Because the beneficiaries do not pay estate taxes on this charitable portion, the money that would have been eaten up by estate taxes can be invested so that the trust grows.

The tax value of the gift is reduced by the annual percentage amount donated to charity, and the remaindermen must wait for their inheritance until the charitable term ends, but in exchange for waiting, the value of the remainder interest is discounted. If the term of the trust is long enough, the value of the remainder can be reduced significantly enough to eliminate an estate tax completely.

For more information on strategies to preserve wealth with estate planning tools like Charitable Leads Trusts, please contact Stouffer Legal at 443-470-3599 in the Greater Baltimore area.

To learn more or get started on your estate plan, just schedule a time to visit us for a no obligation complimentary consultation.

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Britt Stouffer

Britt L. Stouffer is a Maryland attorney experienced in Estates, Trusts, and Elder Law. With over 10 years of experience in Estates and Trusts, she has learned to appreciate how unique each client truly is. On a typical day, you will find her working on Wills, Revocable Living Trusts, Powers of Attorney, Advance Medical Directives, Tax Planning cases, Estate Administration filings, Petitions for Guardianships, Special Needs Planning, and Asset Protection.

658 Kenilworth Dr., Ste. 203, Towson, MD 21204

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