A grantor lead trust provides a donor with a charitable income-tax deduction for the present value of the payments the University is to receive from the trust for a specified period of time. The donor, however, continues to be taxed on the income earned by the trust each year—including the amount distributed to the University. (To avoid this negative tax result, donors often fund grantor lead trusts with tax-exempt securities.) At the end of the trust term, the assets are returned to the donor.
How it Works
- Create trust agreement outlining terms of the trust—usually for a term of years
- Transfer cash or other property to trustee
- Trustee invests and manages trust assets
- Trustee makes annual payments to the University
- Remainder transferred back to you
Benefits
- Annual gift to the University
- Property returned to donor at end of trust term
- Professional management of assets during term of trust
- Charitable deduction, but you are taxed on annual income
