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If you have a sizable estate, wish to avoid taxes, and your heirs are generally taken care of for the foreseeable future, yet you wish to provide them with a substantial inheritance after your lifetime, a Charitable Lead Trust may be the right planned gift for you. A Charitable Lead Trust is an excellent way to give an immediate gift to the Friendship Circle while ultimately transferring assets to your loved ones- often with significantly reduced gift and estate taxes. Both Lifetime and Testamentary Charitable Lead Trusts are available depending on your preference.

Lifetime Charitable Lead Trusts

You can establish a Charitable Lead Trust by transferring cash or appreciated assets, such as securities or real estate during your life, to a trust for the benefit of the Friendship Circle. The trustee may be a charity, a financial institution, you, or an individual of your choice. Your trust then provides annual income based on fixed dollar amounts (annuity trust) or a fixed percentage on the value of the trust (unitrust) to the Friendship Circle for a fixed period, usually 10 to 20 years. In the year you establish the trust, you would be entitled to receive a charitable tax deduction for the present value of the income that will be distributed the Friendship Circle over the duration of the trust.

This is particularly tax-advantageous, because you are entitled to the deduction up-front, rather than being required to wait until distributions to the Friendship Circle are actually made.

Testamentary Charitable Lead Trust

You may also establish a Charitable Lead Trust under the terms of your Will. This is an effective way to make a sizable gift to charity while reducing your estate taxes. Your Will or Revocable Trust would provide that either a certain portion of your estate assets (or the amount that would create a non-taxable estate) should be transferred to a charitable lead trust upon your death. As with the lifetime lead trusts, there must be a fixed dollar amount (annuity trust) or a fixed percentage of the value of the trust (unitrust) that will be distributed to the Friendship Circle