Be a Leader for Your Favorite Charity

Imagine with me for a moment that you've run into a sum of money. Perhaps you received an inheritance. Maybe you got a settlement on an injury or got a big bonus. Maybe you just have some money sitting around, or maybe you even won the lottery. How can you do the most good with what you got while retaining an interest in the assets?

The answer may be what is known as a Charitable Lead Trust. Put simply, a Charitable Lead Trust (CLT) places those assets in trust, invests them, and then gifts a portion or all of the interest, dividends, or other gains and income on the assets to a charitable beneficiary. For example, let's say you ran into $100,000 and placed that money into a CLT in which your church was the beneficiary of one half of the income of the trust for a period of ten years. The other half of the income earned is paid to you directly as spending money. Let's also say that the investments that the trust has with that money earn 6% annually, compounded monthly. Every month, the trust would earn $500. It would then pay to the charitable beneficiary of your choice $250 and another $250 to you. Over the course of ten years, you will have given the charity $60,000, you would have received another $60,000, and the asset that was worth $100,000 would still be worth $100,000 that you could do whatever you wanted to with. 

Why create a Charitable Lead Trust? For starters, it lets the charity of your choice know that you are going to invest for the long haul. It let's them know that a stable income will be coming in for the foreseeable future. At the same time, it can help provide you with an income and help preserve the underlying asset value. Depending on your other deductible spending, it can generate long term income tax benefits. Set up properly, the charitable deduction can offset the capital and other gains that your investment may incur as a result of its growth.

If you'd like to talk more about the features and options you have in a Charitable Lead Trust, give me a call at (866)597-5621. This is one of my favorite documents to draft. If you'd like to play around with some numbers and see just how far your money can go for you and your church or other charity, use the calculator below.

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