Trust Donation Options at UnityPoint Health - Meriter

Trust Options

Charitable Lead Trust

Under a Charitable Lead Trust (CLT) a donor transfers property (typically cash or stock) to the trust. The trust provides an income stream to the charitable organization for a set period of time, usually between 10 to 20 years. After the trust's term is complete, the assets remaining in the CLT are transferred to the beneficiaries selected by the donor. The CLT is a favorable approach for donors who want to help a charitable organization and eventually pass assets to family members at a reduced tax cost. For families with large estates, it is a great way to provide an inheritance to children who will have the advantage of seeing the results of the family's philanthropic efforts.

  • When a donor creates a lead trust to transfer assets to family members, the donor usually does not receive a charitable income tax deduction, instead the CLT receives the deduction.

Charitable Remainder Trust

A Charitable Remainder Trust (CRT) provides income to a donor and/or other beneficiaries. At the end of the CRT's term (typically at the end of the beneficiaries' lifetimes), what remains in the trust is transferred to the charitable organization(s). The CRT provides an income stream back to the donor and/or beneficiaries while also providing a future benefit to the designated charities.

  • A donor will receive an charitable income tax deduction upon the creation of the CRT.
  • Many donors create a CRT for capital gains tax purposes. Rather than sell a highly appreciated asset, pay the capital gains tax, and invest the net amount for a retirement income, donors transfer the appreciated asset to a CRT which sells the asset, and the tax on the capital gains is paid over a period of time as payments are made back to the donor.
  • The donor's estate does not receive an estate tax charitable deduction upon his or her death. However, the estate will benefit from the transfer of assets to the CRT, as the CRT assets (as well as appreciation on the CRT assets) will be removed from the estate for Estate Tax purposes.