By Melody Denson, Director of Mission Advancement
I want to make an impactful gift to my parish and/or the Archdiocese, but I don’t want to short-change my heirs. Is this possible?
One of the most often heard objections to leaving a charity in your will is that it means your heirs will get less of your estate. One of the most common ways of overcoming this obstacle is to set up a Charitable Lead Trust. This can be established during a donor’s lifetime, or, it can be set up through the donor’s estate plan.
Here’s how it works… The donor sets aside a set amount of money into a Charitable Lead Trust. This trust is established for a limited time period. During the life of the trust, the income from its investments is paid to the charity or charities of the donor’s choice.
Upon termination of the trust, the principal reverts to the donor, or to his/her heirs, depending on how it was set up.
So, for example, John Doe establishes a Lead Trust in his will for $500,000 with a trust life of 10 years and his children as the residuary beneficiaries of the trust.
Upon John Doe’s death, the trust is established and, depending on how it was set up, regular payments of the interest from the trust, or regular set amounts will be paid to the charitable beneficiaries. Once the 10 years are complete, the principal corpus of the trust reverts to his children.
In another scenario, a younger donor with some excess assets, can park those in a Charitable Lead Trust, thus enjoying the tax benefits for the duration of the trust. Upon termination of the trust, those assets revert to the donor. In this way, the donor has enjoyed tax benefits, has supported a cause or causes he or she cares about, and still retains ownership of the principal.
Lead Trusts are sophisticated gifts that require the counsel of a trusted tax and financial advisor. If you would like more information, feel free to call Melody Denson, Director of Mission Advancement at 502-585-3291 or email at email@example.com.