If you have a sizeable estate, a Charitable Lead Trust may be the best way to pass along your estate to heirs and avoid gift and estate taxes. Similar to a remainder trust, assets are placed into the lead trust and an annual payout rate is established. However, Young Life would receive the annual payout instead of you and/or other beneficiaries. At the end of your lifetime or a specific number of years, the assets in the trust would then be returned to you or your heirs. This gift lets you enjoy both the philanthropic and tax benefits of a charitable gift, without forfeiting the assets, and can help you pass along those assets to your heirs with a substantially reduced estate and gift tax burden.

Example

The Smiths decide to place $10 million in assets into a Charitable Lead Trust. They also decide that Young Life is to receive 5 percent for 25 years. The results are as follows:

• Provide Young Life with an annual gift of $500,000 or $12.5 million over 25 years.
• Minimize the estate tax.
• Minimize the generation skipping tax.
• Pass along the full $10 million gift to the grandchildren plus the growth on the assets in the trust over and above the 5 percent paid out to Young Life.