[MUSIC] The last vehicle that will talk about is the charitable lead trust. A non-grantor charitable lead trust is a gift plan defined by federal tax law that allows a donor to transfer assets to family members at reduced tax cost, while making a generous gift to charity. As a non-grantor lead trust donor, the donor irrevocably transfers assets, usually cash or securities to a trustee of their choice. For example, their charity or a bank or trust department. During the trust term, the trustee invests the trust assets. Each year, the trustee pays a fixed percentage to the charity. These payments are used for the charitable purpose, the debt they're designated. So this is in some regards, the exact reverse of a charitable remainder trust. With the charitable remainder trust, the donor receives the income. At the end of that trust term, the charity remainder goes to charity. With a charitable lead trust, the income from the charitable lead trust goes to the charity. The actual assets of the charitable lead trust revert back to a family member. This is typically known as a wealth transfer type of arrangement where the donor is trying to transfer assets to heirs. And in doing so, is willing to set the assets aside for a specific period of time. And let the charity receive the income off of those assets. And ultimately, pass the assets on to their heirs. The lead trust term may be for a specific number of years, 10 to 20 years is common. Payments are made out of the trust income or trust principal, if the trust income is not adequate. If the trust income exceeds the charitable payment in the given year, the trust pays income tax on the excess. When the lead trust term ends, the trust distributes all of its accumulated assets to the family member or other beneficiary named by the donor. Again, this is a wealth transfer strategy. The benefits of a charitable lead trust, the donor qualifies for federal gift tax deduction. And so they're trying to get assets to their heirs and they don't want to pay gift tax on it. The charity will receive annual payments from the trust for the term of years. The beneficiary of the trust, for example, family members will receive all the trust assets, including appreciation when the trust terminates. Any asset growth that occurs within the trust will be distributed to the trust beneficiary free of gift or estate tax. The donor's gift will benefit from the expert asset management, just like a charitable remainder trust or charitable remainder annuity trust, or unitrust. The charitable lead trust will also benefit from the expert asset management of the charity. And this planned giving vehicle makes an immediate impact on the charity. Because the charity is receiving the income from the charitable lead trust for that term of years. So the goal for the donors is the donor is looking for an opportunity to transfer wealth to the heirs in a tax efficient way. And also making an immediate impact on a charity. These typically are larger gifts, some charities will have rules on what the minimum amount is. I think a general rule is somewhere $500,000 and above. In most circumstances, you're probably going to see that these are multimillion dollar gifts. And so because of that, because it could be very large in size. If you're receiving the payout on that, a 5% payout rate on that, it can be substantial income to the charity every year. And so the impact can be significant on the charity. And the donor really is doing this one, because they want to make an immediate impact. But two, they have estate tax issues. They have heirs that they want to transfer assets to and they're looking for the most tax-efficient way to do it. How the donor would accomplish it is like a charitable remainder trust. The donor would create a charitable lead trust, and then transfer the assets into the trust. So another vehicle, the charitable lead trust is rare. You won't see this used often. There are some charities that use it fairly frequently at smaller amounts. But for the most part, large charities will have one or two of these. They're not a significant part of a planned giving office or planned giving programs, Asset-based or gift-based, but it is a tool to be used. And in the right situation, it's very, very effective. This concludes our discussion about the various planned giving vehicles. And how they may be best applied in situations involving particular donors. The goals they seek to achieve, we discussed during the session an overview of planned giving vehicles. Understanding of planned giving vehicles and how they may apply in particular situations. And how the appropriate vehicle is identified for a donor. These planned giving vehicles allow a donor to make a larger impact than they ever envisioned. The donor is able to not only accomplish their philanthropic goal, but also meet their family and financial goals. These planned giving vehicles allow our donor to make a larger impact than they likely ever ambitioned. The donor's able to not only accomplish their philanthropic goals, but also meet their family and financial goals. The planned giving tools that we have discussed are essential to allowing donors to accomplish all of their goals. And because of that, they're able to make larger gifts than they ever thought that they could. Because we're modeling the gift structure based on what their goals and interests are. Not just their philanthropic goals, but also their family and their financial goals. And because of that, we're able to increase the impact that they can make, and be a more donor-centered organization. Now that you're equipped with the knowledge of the planned giving vehicles, let's have a discussion. And I'd like each of you to answer two questions. What planned giving vehicle would benefit you most and why? Same question, but only for your parents or grandparents. What planned giving vehicle would benefit your parents or grandparents most, and why? And then the second question, what are the factors that go into choosing the right planned giving vehicle?
