With a Charitable Lead Trust (CLT), a donor irrevocably transfers money or appreciated property to Lutheran Foundation of the Southwest (LFSW). The trust makes charitable payments to the Foundation and its sponsors for a term of years, after which the intact principal goes back to the donor, children, or other beneficiaries with either no or greatly reduced federal gift and estate taxes.

A donor may have multiple Charitable Lead Trusts.

What are some of its key benefits?

• Helps fund dynamic Lutheran ministries in Texas during your lifetime, when you can see results.
• Passes assets to down-line family members (children, grandchildren, etc.) with reduced or no gift taxes.
• Allows you to personally re-assume asset ownership at the end of the term if you desire, yielding certain income tax charitable deductions.
• Gift taxes incurred - if any - will generally be lower than estate taxes which would instead be due on assets not transferred until the donor's death.
• Is flexible. You choose the term of years and the annual payout to the Foundation.
• Reduces or eliminates Estate Taxes by removing the value of the donated asset or money from your taxable estate - substituting lower-rate gift taxes instead.
• Can be used to delay distributions to beneficiaries until they reach a certain age or meet other criteria.
• Reduces income taxes. A portion of the appreciated asset donation is income tax deductible, even though the annual payouts themselves are taxable.

How does a Charitable Lead Trust work?

A Charitable Lead Trust is the reverse of other Charitable Remainder Trusts. With this trust, all income goes to the designated LFSW ministries, then the remainder reverts to the heirs at the end of the trust's term. Payments are made to the Foundation quarterly or annually, at your option. You also choose...

• The term of the trust ­ from 10 to 20 years.
• The beneficiaries you want to receive the remainder principal.
• The size and how the annual payment to the Foundation is determined.
• Designated charitable recipients

A guaranteed annuity interest specifies that the Foundation and its ministries annually receive a set amount or a stated percentage, based upon the trust's value at its inception.

A Unitrust interest provides for a stated percentage payout annually, based upon the fair market value of the trust assets reassessed each year.

Who should consider a Charitable Lead Trust?

A Charitable Lead Trust is especially suited for wealthy individuals in high estate and gift tax brackets who desire to benefit Lutheran Foundation of the Southwest and its sponsors and still pass assets on to family members with little or no tax penalties.

Sample illustration:

Robert Heinze is in the uppermost income tax bracket ­ 39.6%. His two children are currently 14 and 16 years old ­ too young to manage a sizable inheritance. He and his wife desire to give a substantial gift to their ELCA Synod, but are hesitant to take assets away from their heirs. They would also enjoy seeing the benefits of their gifts at work for ministry during their lifetimes. Their accountant recommends a Charitable Lead Trust with the Lutheran Foundation of the Southwest.

Mr. Heinze funds a Charitable Lead Trust with the Foundation with $500,000 cash, specifying his synod receive 8% a year during the trust's 15-year term, with his children then receiving the trust principal.

• The Foundation receives $600,000 over the term of the Charitable Lead Trust.
• His children receive the full $500,000 principal at the end of the term, with NO estate taxes.
• Mr. Heinze receives an immediate charitable gift tax deduction of $342,380, reducing his taxable gift to his children from $500,000 to $157,620. Instead of the 55% estate taxes his family would incur on the entire amount, this reduced gift is instead taxed on the front end at much lower gift tax rates.

Example only. Actual data, income and tax deductions vary case by case. Your LFSW consultant can answer any further questions you might have and develop specific illustrations for your personal estate planning needs and goals.

For a no-cost, no-obligation consultation in the privacy of your home, please complete the free offers page on this website or call 1-800-424-0447.