The Charitable Lead Trust is a giving vehicle that appeals to those donors who wish to support a charity for a specified period of time with the assets then distributed to the donor, or the donor’s family. As in any complex scenario, donors should check with an advisor well versed in current federal tax laws because they are subject to change.
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Example
Mary Ann Smith wishes to support a ten-year initiative with her alma mater by pledging a sizeable gift over the period of a Charitable Lead Trust. At the conclusion of the trust, her children and then grandchildren will receive the benefit of the trust. Whether or not the gifts to children are taxable depend upon generation-skipping tax rules. Trusts funded with tax-exempt assets may prove advantageous.
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Benefits of Charitable Lead Trusts
The Charitable Lead Trust is attractive to donors:
 Who wish to support a fund at Oklahoma State University Foundation to support the university for a “Lead” time, either a specified period of years or a lifetime;
Who may wish to retain a beneficial interest in the assets remaining after the Lead period;
Who may have a highly appreciated asset that could be ideal for contributing to the trust due to potential tax savings
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Variations of Charitable Lead Trusts
The charity receives a certain sum of money each year - Charitable Lead Annuity Trust.
The charity receives a set percentage of the overall value of the trust each year - Charitable Lead Unitrust.
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Types of Charitable Lead Trusts
Charitable Lead trusts may be distinguished in two ways:
Grantor Lead Trust: The donor (or grantor) receives the remainder after the stated period of time per the trust instrument. A grantor Lead trust entitles the donor to an income tax charitable deduction in the year the trust is created. The donor is taxed on the trust’s income every year, however, even though a benefit to charity is being paid.
Nongrantor Lead Trust: The Nongrantor Lead Trust benefits a beneficiary or heirs other than the donor. The distinction among the types of Lead trusts is important in light of each donor’s charitable and tax planning objectives. The achievement of the donor’s objectives regarding the size of the Lead gift or the ultimate size of the remainder interest can be facilitated by selecting the appropriate Lead trust vehicle.
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All donors should consult with their tax attorney or accountant to determine the best scenario for making a charitable contribution to the Oklahoma State University Foundation using a Lead Trust vehicle.
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Tip: Charitable Lead Trusts are the opposite of a Charitable Remainder Trust.
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Contact Us
If you have any questions about any charitable giving information or opportunities to support a specific college or program, please contact the Office of Planned Giving at (800) 622-4678 at plannedgiving@osugiving.com.
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