Combined Life and Legacy Gifts
Charitable Remainder Trusts
When you begin to consider ways to preserve your estate for retirement, or when you are faced with a capital gain that will result in substantial taxes, you may want to consider establishing a Charitable Remainder Trust (CRT). A CRT lets you commit funds for NLF in the future while providing yourself with a current stream of income. A CRT is irrevocable, is usually funded with appreciated assets to avoid tax on the capital gain, and may provide substantial financial, tax and estate planning advantages.
Tax benefits from a CRT include:
A current year income tax charitable deduction for a portion of the market value of any property contributed to the trust
Receipt of payments for life or a term of up to 20 years either as a fixed annuity (charitable remainder annuity trust) or an annually adjustable amount (charitable remainder unitrust)
Capital gains taxes are deferred until periodic annuity or unitrust payments are received
Assets contributed to the CRT will be removed from your taxable gross estate, thereby reducing your potential estate tax liabilities
Charitable Lead Trust
A charitable lead trust (CLT) is a trust arrangement that pays current annual income to NLF for a specified period of years, with the trust principal reverting to you or your family when the trust expires. A CLT helps to generate a larger current income tax deduction and distribute the remainder to your family with zero gift tax. When a CLT is created upon death, your estate taxes are reduced and the property is not taxed when it is distributed to your family. In either case, NLF will receive the annual income payment from the trust and will be free to use that income as soon as NLF receives it, subject to any restrictions you place on the gift.
Endowment funds generate income for immediate use, while the principle remains intact. The primary function of an endowment is to build a pool of assets that will benefit NLF or a specific program that NLF sponsors, e.g., a scholarship, a fellowship, or the Thomas Tang Moot Court competition. Endowment gifts may be made outright, through testamentary instruments, or through deferred gifts such as the charitable remainder trust described above. Often an endowment is created by an initial gift to which others contribute subsequent gifts to build the corpus of the fund from which income can be earned.