Charitable Lead Trust
Protect Your Assets
You can benefit from the tax savings that result from supporting the Houston Symphony Endowment 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 the Houston Symphony Endowment:
A charitable lead annuity trust pays a fixed amount each year to the Houston Symphony Endowment 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 the Houston Symphony Endowment go up as well.
An Example of How It Works
George would like to support the Houston Symphony Endowment 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% of the initial fair market value) to the Houston Symphony Endowment 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 $955,700. Assuming the trust earns an average 6% annual rate of return, George receives approximately $767,240 at the end of the trust term.
*Based on a 1.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.