Charitable Lead Trusts

A charitable lead trust is a way to make a gift to UCSF and to transfer assets to heirs at a reduced gift tax cost. The concept is simple: You transfer cash, securities or other property to a trust to last a set number of years and designate the UCSF Foundation as the income beneficiary. Later, the trust property reverts to your heirs, either outright or in trust.

A charitable lead trust can be used to greatly reduce or completely eliminate the gift tax cost of transferring wealth to children or grandchildren. In addition, any future appreciation of the property can be channeled to heirs without incurring further gift or estate tax liability. Given the size of gift and estate taxes, the savings that can be achieved through use of a charitable lead trust can be significant.

A testamentary charitable lead trust provides an estate tax deduction based on the present value of the charity's income interest. The estate tax payable is based solely on the present value of the heirs' remainder interest. By reducing the value of the heirs' remainder interest, a donor can reduce the amount of estate tax that would otherwise be due. The term of the trust and the payout percentage can be calculated in such a way as to reduce or eliminate estate tax and take maximum advantage of a donor's unified credit.

Charitable lead trusts are more appropriate for donors who are facing a large estate tax. Although the minimum needed to establish a charitable lead trust with the UCSF Foundation as trustee is $100,000, such a trust generally is established and works best when funded with amounts larger than this. Click here for an example of how they work.

There are two basic types of charitable lead trusts:

Charitable Lead Unitrust
Payments to the UCSF Foundation from a charitable lead unitrust are based on a fixed percentage of the value of the trust assets and thus will vary from year to year, depending on the investment performance of the underlying trust assets. Additions can be made to a charitable lead unitrust at any time.

Charitable Lead Annuity Trust
A charitable lead annuity trust pays out a fixed amount annually to the UCSF Foundation for the term of the trust. The annual payment amount is determined once, at the time the trust is established. Additions may not be made to a charitable lead annuity trust.

To Learn More
Read more about this and other types of gifts in Leaving a Legacy: A Guide to Gift Planning. Ask for a copy of this brochure by using the form on the Request More Information page.

Download the Comparison Chart of Giving Plans