Charitable Lead Trust
Protect Your Assets
You can benefit from the tax savings that result from supporting Murray State University without giving up the assets that you'd like your family to receive someday with a donation in the form of a charitable lead trust.
There are two ways that charitable lead trusts make payments to Murray State University Foundation:
A charitable lead annuity trust pays a fixed amount each year to Murray State University Foundation and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust's assets go up in value, for example, the payments to Murray State University Foundation go up as well.
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An Example of How It Works
George would like to support Murray State University Foundation and provide for his children. George received a windfall amount of income and needs a large income tax deduction to offset the income. Following his advisor's recommendation, George funds a grantor charitable lead annuity trust with assets valued at $1,000,000. George's trust pays $70,000 (7 percent of the initial fair market value) to Murray State University Foundation each year for 15 years, which will total $1,050,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $873,110. Assuming the trust earns an average 6 percent annual rate of return, George receives approximately $767,240 at the end of the trust term.
His gift tax deduction is $2,182,775* against the $2,500,000 of assets. Therefore, only the difference ($317,225) is subject to gift tax, which is offset against his lifetime gift tax exclusion. After that, the remaining trust assets and all of their growth will pass to his family at zero additional cost in gift and estate taxes. Had George given the $2,500,000 outright to his children, it would have been a taxable gift.
*Assuming annual payments and a 2.4 percent charitable midterm federal rate.
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- Contact Dr. Bob Jackson at 270-809-6912 or email@example.com to talk about supporting Murray State University Foundation by setting up a charitable lead trust.
- Seek the advice of your financial or legal advisor.
- If you include Murray State University Foundation in your plans, please use our legal name and federal tax ID.
Legal Name: Murray State University Foundation, Inc.
Address: Murray, KY
Federal Tax ID Number: 61-6053844
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.