A charitable lead annuity trust is the most common form of charitable lead trust. This gift plan is a way to transfer assets to family members at a reduced tax cost while creating a funding stream to support scientific research at The Rockefeller University. In this gift arrangement, the donor transfers assets, usually cash or securities, to a trustee, such as a bank, other financial institution, or The Rockefeller University. The trustee invests the assets and then pays a specified annual income to The Rockefeller University for a fixed term of years, commonly ten to twenty years.
The amount of annual income the University is to receive, as well as the term of the trust, is determined by the donor and his/her advisors at the time the trust is created. At the end of the trust’s term, the assets are distributed to beneficiaries designated by the donor, such as family members.
A charitable lead unitrust operates in much the same way as the charitable lead annuity trust with one exception. In the case of a charitable lead unitrust; the annual income payments to The Rockefeller University would reflect a fixed percentage of the annual value of the trust’s assets. Therefore, if the trust’s assets increase in value in a given year, the income payment the University receives also increases.
Charitable lead trusts are appropriate gift vehicles for donors who wish to pass large assets to children or grandchildren while possibly minimizing federal estate and gift taxes. But as such, charitable lead trusts are taxable vehicles.
If you are interested in learning more about charitable lead trusts, please contact Vickie Lister, Senior Director of Planned Giving. The Rockefeller University recommends that you consult with your legal and financial advisors before proceeding with any planned gift.