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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 the Catholic Foundation 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.

CLAT

Without Trust

Gross principal

$2,000,000

$2,000,000

Net principal placed in plan

$2,000,000

$2,000,000

Benefit to family

$3,512,700

$2,752,867

Benefit to Catholic Foundation of Oklahoma

$2,400,000

0

Total taxes

$317,779

$5,770,711


PLEASE NOTE: 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.

For more information

Email us, complete the personal illustration form, or call us at 405-721-4115 so that we can assist you through every step of the process.


The Catholic Foundation
7501 N.W. Expressway
Oklahoma City, OK 73123
405-721-4115 | Fax: 405-721-4114
E-mail: tcasso@catharchdioceseokc.org

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