These trusts, usually funded with an income-producing asset that is expected to appreciate, pay an income stream to the Conservancy over a period of years. At the end of the term, the assets can either revert back to you or pass to those you designate, typically your children or grandchildren. A minimum gift of $250,000 is recommended.
Please note that appreciating assets such as stocks, real estate, and cash, are the best for funding a charitable lead trust because the assets pass to your heirs with the appreciation and without additional tax.
How a Charitable Lead Trust works
Jim Meadows runs around the Reservoir in Central Park every morning. He greatly enjoys the running track, the wonderful vistas, and friends he has made there. Jim would like to make a gift to support the maintenance of the track. He is also considering how to transfer part of the family business to his son who is still quite young. By establishing a charitable lead trust he can:
- Provide an income stream to the Conservancy for a number of years
- Claim a gift tax charitable deduction that will help to offset, if not eliminate entirely, the tax on the gift of the property to his son. Even if the value of the property appreciates significantly, there will be no additional tax when his son receives the property at the end of the trust term. Additionally, his son does not take on the burden of business decisions until he is older
- Remove the property from his taxable estate
Jim will have the pleasure of knowing he is providing meaningful support for the Conservancy's work in Central Park and the running track that means so much to him.