Benefit the University and Preserve Assets with a Charitable Lead Trust

In less than two years the IRS discount rate has plunged from 6.2 percent to 2.0 percent.

What does the discount rate change mean to you?

This steep plunge significantly affects (either negatively or positively) the tax deduction produced by various charitable vehicles. Prominent among the big winners is the charitable lead trust (CLT).

How does a CLT work?

Under this plan, you put assets into a trust that makes payments to a charity for a period of time, after which the assets in the trust are returned to either you (with a grantor lead trust) or to your beneficiaries—typically children and/or grandchildren (with a nongrantor lead trust).

Why is the CLT more attractive right now?

A CLT’s income- or gift-tax deduction increases as the discount rate goes down, thereby increasing the leverage the gift provides: Now, you can pass more to beneficiaries at significantly reduced transfer-tax costs with a nongrantor lead trust or generate a higher income-tax deduction with a grantor lead trust.

To find out more about how you can take advantage of this opportunity by implementing a charitable lead trust, contact us today.

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