Charitable Lead Trust (for family)
If you are looking for a way to pass on some of your assets to your family while reducing or eliminating gift or estate taxes, a Charitable Lead Trust is an excellent option.
Benefits of a charitable lead trust
- Receive a gift or estate tax charitable deduction
- Receive the Montana Endowment Tax Credit
- Pass inheritance on to family at a reduced or zero cost
- Establish a vehicle from which you can make annual gifts to charity
How a charitable lead trust works
- You make a contribution of your property to fund a trust that pays Catholic Foundation of Eastern Montana (for the benefit of the greatest needs, or your parish, the diocese, school or other Catholic organization) income for a number of years.
- You receive a gift or estate tax deduction at the time of your gift.
- You receive the Montana Endowment Tax Credit (for Montana taxpayers)
- After a period of time, your family receives the trust assets plus any additional growth in value.
Contact us
If you have any questions about charitable lead trusts, please contact us. We would be happy to assist you and answer any questions you might have and to provide you with an illustration demonstrating your specific tax benefits.
Zero Tax Plan
It is even possible to set up a lead trust that will allow you to transfer assets to your family with zero transfer taxes. The IRS assumes that a lead trust is only earning at the current low federal rate. If the actual investments of the trust produce a higher return than the payments made to the Catholic Foundation of Eastern Montana over the term of the trust, then the full value of the trust may be transferred to family with zero gift tax.
FLP/Lead Trust Plan
To discount your gift to family even more, you may consider first transferring your real estate or other assets into a family limited partnership (FLP) which will fund your lead trust. The combination of the FLP, the lead trust and a gift exemption can permit the lead trust to pay income to us for a number of years and potentially transfer substantial assets tax-free to your family.
Increasing Payment Lead Trust
With increased volatility in the stock market you may also want to consider creating a lead trust that makes fixed payments of increasing amounts to us over time. Because the payments to us are fixed, your family ultimately benefits from any growth in the trust. Low payouts in early years allow the trust to grow, thus allowing protection should the economy produce below-average returns in the future.
