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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
July/August 2023
The Nuts and Bolts of a Charitable Lead Trust
High net worth families often face the dual challenges of giving to charity while also ensuring that loved ones – especially a surviving spouse and children – remain financially secure. A charitable lead trust can help meet these dual challenges.
Know the Difference
Those people who use trusts both for charitable giving and providing for loved ones typically use one of two trusts. The charitable lead trust – the focus in this article – guides charitable planned giving for a set amount of time, after which beneficiaries, which are often family, receive the remaining assets from the trust.A CHARITABLE TRUST CAN HELP PROVIDE FOR A FAVORED CHARITY AND LOVED ONES.
A charitable remainder trust, which we will detail in the next issue of Let’s Talk Money, does the opposite. A person named in the trust, typically a family member, receives income from the trust for either their lifetime or another predetermined amount of time. At the end of the term established in the trust, all remaining assets go to charities named in the trust.
Both types of trusts are typically irrevocable, making their terms extremely difficult to change. Before creating either of these, enlist the help of the appropriate legal, tax and financial professionals.
The Basics
Once you contribute assets to a charitable lead trust, its terms will distribute those assets as instructed. The charity or charities named in the trust typically receive donations at least annually as a percentage of assets or as a fixed annuity payment. At the end of the term, any beneficiaries – another charity or loved ones – may receive remaining assets.The Benefits
A charitable lead trust can help reduce potential estate taxes and help enable intergenerational wealth transfer, while also benefitting a favored charity or charities. Depending on how the trust is set up, it may also create income tax advantages.
For example, a grantor trust creates an income tax deduction for the donor up front, but taxes are then paid by the donor upon receiving any income from the trust. A non-grantor trust establishes a separate trust to pay taxes, so the individual donor doesn’t get an income tax deduction.
Choosing the right trust for your situation can be complicated, so it is advisable to consult an estate planning attorney and other trusted advisors before establishing this or any irrevocable trust.
This content does not constitute financial, insurance, investment, legal, tax, or general lending advice. Consult your financial, legal and tax professionals regarding your personal needs, goals and circumstances.
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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
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