Protect Your Assets

Charitable Lead Trusts Offer You Options

You can benefit from the tax savings that result from supporting Winona State University without giving up the assets that you'd like your family to receive someday with a donation in the form of a charitable lead trust.

There are two ways that charitable lead trusts make payments to WSU:

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

An Example of How It Works

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

George's trust pays $175,000 (7 percent of the initial fair market value) to WSU 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 George 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.

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Next Steps

  1. Contact Winona State University Foundation Office at 1-800-242-8978 ext. 5020 or 507-457-5020 or PlannedGiving@winona.edu to talk about supporting WSU by setting up a charitable lead trust.
  2. Seek the advice of your financial or legal advisor.
  3. If you include WSU in your plans, please use our legal name and federal tax ID.

Legal Name: Winona State University Foundation
Address: Winona, MN
Federal Tax ID Number: Please contact us for our federal tax ID number.