Charitable lead trusts are very useful as part of a plan to support UCS and ultimately transfer assets to family members with the potential for significantly reduced gift and estate taxes. For example, you may establish a charitable lead trust that pays income to UCS for a designated number of years. At the end of the trust's term, the trust's assets, including any appreciation, pass tax-free to family members. Rather than taking a charitable income tax deduction for your contribution to the trust, your deduction will be applied to the gift tax. The deduction can partially or even fully offset the gift tax due on the transfer of the trust's assets to your heirs. Furthermore, the income generated by the trust and paid to UCS is removed from your yearly taxable income, and the assets you transferred to the trust are removed from your taxable estate.

There are several options available in establishing a charitable lead trust. You may elect to have UCS's lead interest in the trust take the form of a guaranteed annuity, which is called a charitable lead annuity trust. Or UCS's lead interest may be determined by applying a fixed percentage to the value of trust assets, as valued annually, which is called a charitable lead unitrust.

Charitable lead trusts are either grantor lead trusts if the trust assets are returned to you upon termination of the trust, or non-grantor lead trusts if you specify that the trust assets will pass on to family members or other named beneficiaries.

Since the tax rules regarding lead trusts are complex, UCS encourages you to consult with an attorney who specializes in estate planning and estate and gift taxes.

For more information
For more information, please contact Adam Kessler by phone at 800-666-8276 or by email at akessler@ucsusa.org.