A lead trust holds your gift of appreciating assets, makes an annual gift to The Chester County Hospital Foundation for a period of years, and then distributes the remaining principal to your designated heirs. A lead trust can provide significant estate and financial planning benefits and many donors use this gift plan to pass assets to their children or other heirs.
The lead trust reduces the cost of passing property to your heirs in two ways. First, the estate- and gift-tax value of assets you place in your lead trust will be reduced by the present value of the income that the trust will pay to The Chester County Hospital Foundation. The longer the lead trust makes an annual gift and the larger the annual gifts, the larger your estate and gift tax deduction will be.
Second, the taxable value of the lead trust assets is fixed as of the time you establish the trust - any subsequent increase in the value of the assets will pass to your heirs outside your estate and thus free of estate and gift tax.
This combined reduction in the taxable value of the lead trust assets means that your family can often receive more from an estate plan containing a lead trust than they could from an outright bequest from you.
The lead trust also offers you these additional features:
A lead trust can pay The Chester County Hospital Foundation a fixed amount of income every year (a charitable lead annuity trust), or pay us a fixed percentage of the value of trust principal, as revalued annually (a charitable lead unitrust). The choice of format will have some effect on your tax savings. We can help you and your advisors model the different options as you consider your gift plan.
For more information, please contact Colleen Becht-Foltz, Director of Development, at Colleen.Becht-Foltz@uphs.upenn.edu or by calling 610-431-5697.
Last Updated: 2/4/2016