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Charitable Lead Trust

Charitable lead trusts can be a good way to preserve assets for yourself or your beneficiaries while making annual gifts to 92nd Street Y.

They work in most, but not all, ways in an opposite manner from life income gifts like charitable gift annuities. Assets are placed into a charitable lead trust and the trust makes annual payments to 92nd Street Y for a specified term of years, often 10 to 15. After that, the assets are returned either to you or to your individual beneficiaries.

These trusts are an excellent way to transfer appreciating property (preferably income-producing) to beneficiaries while supporting 92nd Street Y. They are a particularly effective means of reducing, or possibly eliminating, the estate and/or gift tax on the eventual transfer of these assets to your beneficiaries.

There are two types of charitable lead trusts: a grantor lead trust or a nongrantor lead trust. Both can be either a lead annuity trust (paying a fixed amount to 92nd Street Y) or a lead unitrust (paying a variable annual amount to 92nd Street Y, based on a stated percentage of the value of the trust's assets).

Grantor Charitable Lead Trust

  • You (the grantor) donate assets to a trust.
  • The trust makes payments to 92nd Street Y for a term of years.
  • If the trust is qualified (it pays the charity either a unitrust amount or a guaranteed annuity amount), you can claim an immediate income tax charitable deduction for the payments that 92nd Street Y will be receiving.
  • You are responsible for any tax due on the trust's income. Thus, it is often a good idea to fund the trust with tax-exempt securities.
  • At the end of the term, the trust's assets are returned to you.

Nongrantor Charitable Lead Trust

  • You place assets in a lead trust, either during your lifetime or by will.
  • The trust makes payments to 92nd Street Y for a term of years.
  • At the end of the term of the trust, the assets pass to the beneficiaries you name.
  • Gift and estate taxes that would be due could be reduced, often considerably, by the value of 92nd Street Y's lead interest.

For more information about whether a charitable lead trust is a good vehicle for you to discuss with your estate or financial planner, or information about how a such a gift can benefit you and 92nd Street Y, please call 212.415.5678 / email.

Planned gifts like charitable lead trusts entitle donors to membership in 92nd Street Y Partners, a group of generous individuals who have chosen to remember the institution in their estate plans.