Charitable Lead Trust

A Charitable Lead Trust allows individuals who have estate tax issues to transfer assets to heirs at a greatly reduced tax cost.

How a lead trust works

• The donor transfers assets into a lead trust managed by a trustee of his or her choice.
• During the lead trust's term, the trustee invests the trust's assets and provides a fixed (Lead Annuity Trust) or variable (Lead Unitrust) dollar amount each year to Bucknell.
• These payments are used for the charitable purpose designated by the donor. Payments continue until the trust term ends or until the highly unlikely event that the trust distributes all its assets.
• The trust's term may be for a specific number of years (10 to 20 years is common), one or more lifetimes, or a combination of the two.
• When the lead annuity trust term ends, the trust distributes all of its accumulated assets to family members or other beneficiaries named by the donor.

Benefits of a lead trust

• A donor who funds a trust receives a gift or estate deduction rather than an income tax deduction.
• Because what will be transferred to heirs is valued when the trust is funded, any accumulation in value is transferred tax-free.
• A lead trust is an excellent way to make an immediate gift to Bucknell.

Planning tip

Current historically low interest rates make lead trusts particularly beneficial for estate planning. For personal assistance, contact the Gift Planning Office at 570.577.3271.