Do you want to find a way to pass on family values to your adult children; control where your charitable dollars go; provide hope for future generations; reduce your current income tax and ultimately your estate tax?
Who doesn't want to do that? All you need is more than $5,000,000 in extra assets ($10,000,000+ would actually be better). Add a family foundation; a charitable lead trust and this recent IRS private letter ruling. You get to have your cake and eat it too. Read on.
A recent private letter ruling as reported by the Planned Giving Design Center allows an individual to direct that a charitable lead trust created by him can make payments to the private foundation also created by him. This is a deductible gift for Federal gift tax purposes and no portion of the trust property will be included in the gross estate.
What is the catch? The three-legged stool concept. There is a long-standing principal of charitable trust instruments. The Settlor (or any beneficiary) may not be the trustee and the beneficiary. An independent, professional fiduciary can be helpful to keep the benefits flowing and avoid problems with the IRS. Learn about The ACE Fiduciary Group here www.acefiduciary.com.
In this instance, the IRS has ruled that in order to keep the benefits planned for this estate, the trustor may not serve as the trustee or retain an interest in or right to alter or revoke the trust. In this scenario, the funds paid from his charitable trust to his foundation must be separately managed and administered by an independent committee. Again, keeping the concept of the three-legged stool in tact.
If you expect to accumulate more than $5,000,0000 in assets during your lifetime, this is a good hat trick to know about. Combined with the incentive to reduce long term capital gains taxes, it could be just the right strategy. Talk to a qualified estate planning attorney and tax advisor about your particular situation. Read the full ruling and analysis http://www.pgdc.com/pgdc/charitable-lead-annuity-trust-qualifies-gift-tax-deduction-and-excluded-estate.
Even without an extra large estate, high income individuals are taking a look at how a Charitable Lead Trust can be used to benefit a specific charity while reducing taxes on long-term capital gains. http://www.pgdc.com/pgdc/charitable-giving-just-got-more-affordable.
Imagine if you had a large estate. Where would you like to leave a legacy of hope? Post your comments here.
