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Charitable Lead Trust
(A Charitable Way to Pass Assets to Heirs)
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How it works
- You contribute cash, securities or other property to a trust.
- The trust makes fixed annual payments to the American Red Cross for a specifies term of years.
- When the trust ends, the remaining principal goes to your heirs.
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Benefits
- You qualify for a gift tax deduction for the present value of the annuity payments to the Red Cross.
- The annuity payments and the term of the trust can be specified in such a way so as to reduce or even eliminate the transfer taxes due when the principal reverts to your heirs.
- All appreciation that takes place in the trust does tax-free to your heirs.
- You can use your available estate tax credit ($1.5 million per person in 2004; $2.0 million per person beginning in 2006) to further reduce taxes on transfers to your heirs.
- You can have the satisfaction of making a significant gift to the Red Cross now that reduces taxes due to transfers to your heirs later.
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