Do you want to benefit from the tax savings that result from supporting HSSV, yet you don't want to give up any assets that you'd like your family to receive someday? You can have it both ways with a charitable lead trust.
There are two ways charitable lead trusts make payments:
A charitable lead annuity trust pays a fixed amount each year to HSSV and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust's assets go up in value, for example, the payments to HSSV go up as well.
George would like to support HSSV and provide for his children. George received a windfall amount of income and needs a large income tax deduction to offset the income. Following his advisor's recommendation, George funds a grantor charitable lead annuity trust with assets valued at $1,000,000. George's trust pays $70,000 (7 percent of the initial fair market value) to HSSV each year for 15 years, which will total $1,050,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $873,110. Assuming the trust earns an average 6 percent annual rate of return, George receives approximately $767,240 at the end of the trust term.
*Assuming annual payments and a 2.4 percent charitable midterm federal rate.
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Legal Name: Humane Society Silicon Valley
Address: 901 Ames Ave. Milpitas, CA 95035
Federal Tax ID Number: 94-1196215