Charitable Gift Annuities
Charitable Trusts
A charitable lead trust (CLT) that benefits the Darden School of Business is an irrevocable trust that makes payments to Darden during the trust term and then distributes the remaining assets to the family or other beneficiaries you designate. It is a wonderful way to witness the impact your gift is having at Darden during your lifetime and transfer assets to family or other beneficiaries at the end of the trust term.
A CLT is often used as part of a wealth transfer plan that may allow you to provide significant support for Darden with little or no impact on the inheritance of your heirs—the applicable gift, estate, and/or generation-skipping transfer (GST) taxes on the initial transfer can be reduced or eliminated by carefully selecting the trust payout rate and term. A CLT is not an income tax-exempt trust, so it will typically (though not always) be structured in a manner that does not affect your income tax situation.
Charitable Lead Trust Benefits
The benefits of a CLT, including possible income, estate, gift, and GST tax benefits, will vary depending on your financial situation, whom you designate as your remainder beneficiaries, and how your trust is structured. For this reason, a CLT is often used as part of a comprehensive estate and philanthropic plan. With a CLT, you can:
- Provide and witness the impact of immediate, reliable support to Darden.
- Reduce or eliminate gift, estate, and (if applicable) generation-skipping transfer tax liability on the transfer to heirs.
- Pass remaining trust assets, including any appreciation, to your heirs free of gift, estate, and (if applicable) GST tax on termination.
A charitable lead trust can be a powerful tool in planning for your future and an inheritance for your family, but there are technical complexities. The choice of format will affect your tax benefits. The Darden School Foundation will be pleased to work with you and your financial advisor to determine whether a charitable lead trust is a good plan for you. We can model different options to give you a sense of how a lead trust could work in your situation.
How to create a Charitable Lead Trust
- You transfer assets into a specific type of irrevocable trust carefully structured to meet your personal, financial, and philanthropic goals.
- During the trust term, the trustee will invest the trust funds and make annual payments to Darden as you have directed. Most CLT donors create their trusts outside of the University with a bank or trust company named as trustee. UVA can serve as trustee of a CLT funded with a minimum of $500,000.
- On termination, the remaining trust assets will be distributed to your beneficiaries free of transfer tax.
The Cornerstone Society recognizes those who are honoring the University’s future through planned gifts, including bequests, beneficiary designations, charitable gift annuities, and charitable trusts.
The University of Virginia Darden School Foundation does not provide legal or tax advice. We recommend that you seek your own legal and tax advice in connection with gift and planning matters. To ensure compliance with specific IRS requirements, we disclose to you that this communication (including any attachments) is not intended or written to be used and cannot be used for the purpose of avoiding tax-related penalties.