For those who prefer to make a significant gift to The Foundation without permanently parting with ownership of assets, a temporary gift of income may be useful.  A charitable lead trust is a trust arrangement whereby you create a trust that pays income to The Foundation for a period of time, with the property eventually returned to you or some person you designate.  The income payment may be either a percentage of the trust assets or a fixed amount.  The trust can be set up during your lifetime or in your will or living trust.

This giving method is often attractive to those who anticipate heavy estate taxes because it allows the trust principal to be transferred to children, grandchildren or others free of, or at greatly reduced, federal gift and estate taxes. However, careful planning is important, since a generation skipping tax may be imposed on large transfers to grandchildren and others who are more than one generation younger than you.

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A charitable lead trust for 20 years was established by Mrs. Smith.  Each year, the trust will make charitable gifts equal to 7.8% of the value of the assets used to fund the trust.  At the end of the 20 years, the remaining assets will be distributed to Mrs. Smith’s children.  The estate tax deduction will be 100% of the amounts contributed by the trust, so no estate tax would be payable on these assets by Mrs. Smith’s estate.