Goal: Pass assets to heirs at potential tax savings
Benefit: Charitable tax deduction, favorable estate tax circumstances
Phil and Alicia had a successful business developing both residential and commercial real estate. They realized that their assets provided more income than they need for their family's current living expenses; however they wanted to maintain their assets to ensure their grandchildren would have resources for college educations. One of their first charitable gifts had been a gift of appreciated stock. They discussed their circumstances with their financial advisor who showed them how they could make a charitable gift now and be able to enjoy seeing the results while they were still here.
Phil: "It really has been a wonderful ride. When we first started developing residential housing, we had no idea where it would all lead. We were fortunate to make some choices that really set up the company for success. It's grown beyond our wildest dreams."
Alicia: "We have been able to provide a wonderful home for our children, but they are off on their own now with their own families. While the company has grown, our immediate needs have shrunk."
Phil: "Not too long ago, we sat down with our kids and our advisors and talked about what was important to us and what we really wanted. Our kids are all doing fine on their own. We certainly don't need more. Our attorney told us about something called a charitable lead trust funded with some of our excess assets."
Alicia: "It sounded great to us - some tax benefits and our estate remains intact for our grandchildrens' education. While we are helping to make a difference in other people's lives, we're able to do it while we're here and can be part of it. It really feels good to see firsthand how the income from the trust can really make a difference ."
Phil and Alicia wanted to contribute $250,000. They placed a sufficient amount of income producing commercial property into a Charitable Lead Trust (CLT) that would make annual payments of $25,000 over ten years. This will provide the charity with $250,000 in total and after ten years, the assets will pass to the donor's heirs. Because the gift tax deduction and the amount subject to gift tax is determined at the time the assets are contributed to the CLT, any appreciation of the assets that takes place during the term of the trust is not subject to additional gift or estate tax.
As we said earlier, there are as many ways to support Cuesta College Foundation as there are needs for your support. Please contact us should you have questions or if you would like to discuss your personal circumstances to see how you can enrich your heart and the lives of others as many others already have. The next page has some final thoughts.