Charitable Lead Trusts
(Complete gift description)

Your business is on a growth track, and your children are learning the ropes fast. Your planning priority is to keep the enterprise that you worked so hard to establish intact for them to inherit and enjoy. You want to make a gift but you need to consider your children, too.

What if there were a way to make a gift to The Children's Hospital Foundation and pass assets to your heirs in a tax advantage way? The solution is a non-grantor lead trust. A non-grantor lead trust pays income to Children's for a period of years and then passes the remaining principal back to the beneficiaries you have selected.

What are the tax advantages of this type of lead trust?

The non-grantor lead trust reduces the cost of passing property to your heirs in two ways. First, the value of the assets you place in your lead trust, for estate and gift tax purposes, will be reduced by the present value of the income that the trust will pay Children's. Second, the taxable value of the lead trust's assets is fixed at the time you establish the trust. This means that any subsequent increase in the value of the assets will pass to your heirs outside your estate and thus free of estate or gift tax.

In other words, this combined reduction in the taxable value of the assets means that your family can often receive more from an estate plan containing a non-grantor lead trust than they could from an outright bequest from you.

Are there additional features that I should consider?

• The lead trust can be funded with shares in a growing family business, thus lowering the tax cost of passing ownership on to the next generation.
• The income earned by a non-grantor lead trust while it is in operation is not taxable to you.
• The trust can run for a term of years or for your lifetime.
• The lead trust is the only income-gift that delivers immediate benefits to Children's.
• The longer the lead trust pays Children's income, and the more income it pays us, the larger your estate and gift tax deduction will be.

How is the amount given to Children's determined?

When you create your trust, you have several options. First, you can decide whether you want us to receive a fixed amount of income each year (an annuity lead trust), or whether we will receive a fixed percent of the value in the trust (a unitrust lead trust). But wait, you have another choice, too. You also decide how long we are to receive income. You may decide it will be for a period of years or based on a measuring life.

What if I want the income to return to me?

This is certainly possible through the Grantor Lead Trust. The non-grantor lead trust offers you more significant tax benefits; however we would be happy to explain the benefits of a Grantor Lead Trust to you, too.

How do I create a Charitable Lead Trust?

Setting up a charitable lead trust is not particularly difficult, but you should be advised by an attorney with expertise in the area of charitable trusts and estate planning. To save you time and expense, we can provide you with an initial draft of the lead trust agreement for review by you and your attorney. Once your trust agreement is signed, you can fund your lead trust by transferring assets to your trustee.

For more information

Email us, complete the personal illustration form, or call us at 720-777-1700 so that we can assist you through every step of the process.