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Provide for Your Loved Ones and the Federation

Charitable Lead Trusts

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Do you want to benefit from the tax savings that result from supporting the Federation, yet you don't want to give up any assets that you'd like your family to receive someday? You can have it both ways with a charitable lead trust.

There are two ways charitable lead trusts make payments:

A charitable lead annuity trust pays a fixed amount each year to the Federation 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 Federation go up as well.

An Example of This Type of Gift

Man smilingLeonard would like to support the Federation and provide for his children. Following his advisor's recommendation, Leonard funds a charitable lead annuity trust with assets valued at $2,500,000.

Leonard's trust pays $175,000 (7 percent of the initial fair market value) to the Federation each year for 15 years, which will total $2,625,000. After that, the balance in the trust goes to his children. Assuming a 6 percent investment return, the children will receive approximately $1,918,101.

His gift tax deduction is $2,182,775* against the $2,500,000 of assets. Therefore, only the difference ($317,225) is subject to gift tax, which is offset against his lifetime gift tax exclusion. After that, the remaining trust assets and all of their growth will pass to his family at zero additional cost in gift and estate taxes. Had Leonard given the $2,500,000 outright to his children, it would have been a taxable gift.

*Assuming annual payments and a 2.4 percent charitable midterm federal rate.

Learn How to Fund It

You can use the following assets to fund a charitable lead trust:

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Next Steps

  1. Contact Amy Newman at 952-417-2328 or anewman@jewishminneapolis.org to talk about supporting the Federation by setting up a charitable lead trust.
  2. Seek the advice of your financial or legal advisor.
  3. If you include the Federation in your plans, please use our legal name and federal tax ID.

Legal Name: Minneapolis Jewish Federation
Address: 13100 Wayzata Blvd., #200, Minnetonka, MN 55305
Federal Tax ID Number: Please contact us for our federal tax ID number.

Contact Amy Newman at anewman@jewishminneapolis.org or 952-417-2328.

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