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See which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From Two Ways to Donate.
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You can benefit from the tax savings that result from supporting Penn State 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 Penn State:
A charitable lead annuity trust pays a fixed amount each year to Penn State 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 Penn State go up as well.
Learn more by viewing our Charitable Lead Trust fact sheet.
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An Example of How It Works
George would like to support Penn State and receive tax benefits. He received a windfall amount of income and needs a large income tax deduction to offset it. Following his advisor’s recommendation, George funds a grantor lead annuity trust with assets valued at $1,000,000. George’s trust pays $60,000 (6% of the initial fair market value) to Penn State each year for 15 years, which will total $900,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $614,445. Assuming the trust earns an average 8% annual rate of return, George receives approximately $1,600,286 at the end of the trust term.
*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
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