Charitable Lead Trusts
(Gift example*)

Example

Assume that you use appreciated property with an average cost basis of 50% to fund a $2 million Charitable Lead Annuity Trust (CLAT) that makes a 6% annuity payment ($120,000) to Pomona College for 20 years, after which the trust principal reverts to your grandchildren in a generation skipping transfer. Assume also that your gross estate is currently $10 million, you have made no previous taxable transfers, you are in the 35% federal income tax bracket, and the state income tax for trusts is 2.5%. Assume further that your average total investment return is 5% over the 20 year term. A 5.6 IRS Discount Rate is used to calculate the value of the remainder interest to your heirs.

PLEASE NOTE: The calculations and tax benefits included in this example are estimates only. Actual benefits may vary. This example is for illustrative purposes only and is not intended as legal or tax advice. Consult your legal and tax advisors prior to making any material decisions based on this data.

Pomona College
Trusts and Estates
550 North College Ave
Alexander Hall 235
Claremont, CA 91711
(909) 621-8143 or (800) 761-9899
Fax: (909) 621-8654
pomonaplan@pomona.edu