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If you want to make an impact now at Gleaners Community Food Bank and also provide for your family later, consider setting up a charitable lead trust. You transfer cash or other assets to a trust that makes payments to Gleaners Community Food Bank for a period of time. When the term is up, the remaining trust passes to your family or other beneficiaries you select.
There are two ways that charitable lead trusts make payments to Gleaners:
A charitable lead annuity trust pays a fixed amount each year to Gleaners and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year to Gleaners 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 Gleaners go up as well.
George would like to support Gleaners and receive tax benefits. 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 $60,000 (6% of the initial fair market value) to Gleaners each year for 15 years, which will total $900,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $686,160. Assuming the trust earns an average 8% annual rate of return, George receives approximately $1,619,706 at the end of the trust term.
*Based on a 3.6% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
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Legal name: Gleaners Community Food Bank Inc. of Southeastern Michigan
Address: 2131 Beaufait, Detroit, MI 48207
Federal tax ID number: 38-2156255
See which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From Two Ways to Donate.View My Guide