This agreement between you and a trustee can provide fixed or variable income to meet the specific financial needs of an interim beneficiary. When this trust terminates, trust assets are passed to The Ohio CPA Foundation as the charitable beneficiary.

How it works

A charitable lead trust is created by transferring property, such as cash, securities, privately held stock, real estate, and limited partnerships, to a trust. A charitable lead trust can be funded during your lifetime or through a will. During the term of the trust, which is often a specified number of years, The Ohio CPA Foundation receives either a fixed dollar amount or a fixed percentage of the trust principal, revalued annually. Additional contributions to the trust are permitted. At the end of the trust term, the remaining principal is distributed to your beneficiaries – typically children or grandchildren – either outright or in further trust.

Benefits of a charitable lead trust

  • Gift and estate tax benefits
  • Possibility of gift tax to be eliminated

Example of a charitable lead trust

Mrs. Smith, a widow, wants to pay tribute to her late husband’s deep appreciation of the CPA profession with a gift to The Ohio CPA Foundation. She also wants to pass some of her wealth to her grandson.

Upon the recommendation of her financial advisor, Mrs. Smith chooses to create a $3 million charitable lead trust to last the duration of her life, naming the Foundation as beneficiary of an annual payment of 8 percent of the trust’s assets, valued annually, during that term. The Foundation will receive an annual payment amounting to $240,000 in the first year and a variable amount in each additional year of the trust. When the trust terminates at Mrs. Smith’s death, the assets will pass to her grandson.

By establishing a charitable lead trust, Mrs. Smith is able to accomplish many things: she makes a gift to the Foundation in memory of her late husband; she reduces the size of her taxable estate; and she passes on a large gift to her grandson at a reduced taxation level.

We invite you to contact us with questions and welcome the opportunity to discuss these options further with you. We highly recommend that you also speak to a financial adviser.