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Charitable Lead Trusts
(Gift example*)

Example

Assume that you use appreciated property with an average cost basis of 50% to fund a $2 million Charitable Lead Annuity Trust (CLAT) that makes a 6% annuity payment ($120,000) to NPCA for 15 years, after which the trust principal reverts to your grandchildren in a generation skipping transfer. Assume also that your gross estate is currently $10 million, you have made no previous taxable transfers, you are in the 35% federal income tax bracket, and the state income tax for trusts is 2.5%. Assume further that your average total investment return is 7% over the 15 year term. A 2.4% IRS Discount Rate is used to calculate the value of the remainder interest to your heirs.

CLAT

Without Trust

Gross principal

$2,000,000

$2,000,000

Net principal placed in plan

$2,000,000

$2,000,000

Benefit to family

$2,358,758

$3,093,554

Benefit to National Parks Conservation Association

$1,800,000

0

Total taxes

$143,822

$2,152,698


PLEASE NOTE: This example is for illustrative purposes only and is not intended as legal or tax advice. Consult your legal and tax advisors prior to making any material decisions based on this data.

For more information

Email us, complete the personal illustration form, or call us toll free at 1.877.468.5775 so that we can assist you through every step of the process.