Charitable lead trust
Protect your Assets
An Example of How it Works
George would like to support the Fairmont Opera House and provide for his children. George received a windfall amount of income and needs a large income tax deduction to offset the income. Following his advisor’s recommendation, George funds a grantor charitable lead annuity trust with assets valued at $1,000,000. George’s trust pays $70,000 (7 percent of the initial fair market value) to the Fairmont Opera House each year for 15 years, which will total $1,050,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $854,311. Assuming the trust earns an average 6 percent annual rate of return, George receives approximately $767,240 at the end of the trust term.
*Assuming annual payments and a 2.4 percent charitable midterm federal rate.
- Contact Blake Potthoff at 507-238-4900 or at firstname.lastname@example.org to talk about supporting the Fairmont Opera House by setting up a charitable lead trust.
- Talk to your financial or legal advisor to learn which assets will or will not trigger taxable income when paid to a beneficiary.
- If you include the Fairmont Opera House in your plans, please use our legal name and federal tax ID.
Legal Name: Fairmont Opera House, Inc.
Address: 45 Downtown Plaza, Fairmont, MN 56031
Federal Tax ID Number: 41-1408912
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.
Support the Opera House Without Giving Up Assets
You can benefit from the tax savings that result from supporting the Fairmont Opera House 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 the Fairmont Opera House:
A charitable lead annuity trust pays a fixed amount each year to the Fairmont Opera House 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 Fairmont Opera House go up as well.
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