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You can benefit from the tax savings that result from supporting Sweet Briar College without giving up the assets that you'd like your family to receive someday with a donation in the form of a charitable lead trust.
There are two ways that charitable lead trusts make payments to Sweet Briar:
A charitable lead annuity trust pays a fixed amount each year to Sweet Briar 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 Sweet Briar go up as well.
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An Example of How It Works
Elizabeth would like to support Sweet Briar and provide for her children. Following her advisor's recommendation, Elizabeth funds a charitable lead annuity trust with assets valued at $2,500,000.
Elizabeth's trust pays $175,000 (7 percent of the initial fair market value) to Sweet Briar each year for 15 years, which will total $2,625,000. After that, the balance in the trust goes to her children. Assuming a 6 percent investment return, the children will receive approximately $1,918,101.
Her gift tax deduction is $2,317,400* against the $2,500,000 of assets. Therefore, only the difference ($182,600) is subject to gift tax, which is offset against her lifetime gift tax exclusion. After that, the remaining trust assets and all of their growth will pass to her family at zero additional cost in gift and estate taxes. Had Elizabeth given the $2,500,000 outright to her children, it would have been a taxable gift.
*Assuming annual payments and a 1.6 percent charitable midterm federal rate.
Calculate Your Benefits
Submit a few details and see how a charitable lead trust can benefit you.
- Contact Claire Dennison Griffith '80 at 434-381-6479 or email@example.com to talk about supporting Sweet Briar by setting up a charitable lead trust.
- Seek the advice of your financial or legal advisor.
- If you include Sweet Briar in your plans, please use our legal name and federal tax ID.
Legal Name: Sweet Briar College
Address: 134 Chapel Road, Sweet Briar, VA 24595
Federal Tax ID Number: 54-0534105
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.