Gift Planning

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Charitable Lead Trust

If you are looking for a way to pass on some of your assets to your family or other loved ones while reducing or eliminating gift or estate taxes, a charitable lead trust is an excellent option.

Charitable Lead Trust
Property
Lead Trust
Term of
Years
Income to WFU
Trust to Family

How it Works

  1. You make a contribution of your property to fund a trust that pays Wake Forest University income for a number of years.
  2. After a period of time, your family receives the trust assets plus any additional growth in value.

Zero Tax Plan

It is even possible to set up a lead trust that will allow you to transfer assets to your family with zero estate and gift taxes. The IRS assumes that a lead trust is only earning at the current low federal rate. If the actual investments of the trust produce a higher return than the payments made to Wake Forest over the term of the trust, then the full value of the trust may be transferred to family with zero gift or estate tax.

Family Limited Partnership/Lead Trust Plan

To discount your gift to family even more, you may consider first transferring your real estate or other assets into a family limited partnership (FLP) or a family limited liability company (FLLC) which will fund your lead trust. The combination of the FLP or FLLC, the lead trust and a gift exemption can permit the lead trust to pay income to us for a number of years and potentially transfer substantial assets tax-free to your family or other loved ones.

Increasing Payment Lead Trust

With increased volatility in the stock market, you may also want to consider creating a lead trust that makes fixed payments of increasing amounts to us over time. Because the payments to us are fixed, your family ultimately benefits from any growth in the trust. Low payouts in early years allow the trust to grow, thus allowing protection should the economy produce below-average returns in the future.

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