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If you want to make an impact now at Cal Poly 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 Cal Poly 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 Cal Poly:
A charitable lead annuity trust pays a fixed amount each year to Cal Poly and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year to Cal Poly 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 Cal Poly go up as well.
George would like to support Cal Poly 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 Cal Poly 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 $614,450. Assuming the trust earns an average 8% annual rate of return, George receives approximately $1,579,621 at the end of the trust term.
*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
Submit a few details and see how a charitable lead trust can benefit you.
Legal name: California Polytechnic State University Foundation
Address: Heron Hall, Building 117, San Luis Obispo, CA 93407-0444
Federal tax ID number: 20-4927897
See which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From Two Ways to Donate.