A charitable lead trust is a powerful way to make a future transfer of assets to your heirs at a significantly reduced gift and estate tax cost, while also supporting your charity with the philanthropic gift of income. The trust is established for a specified number of years, the lives of one or more individuals, or a combination of the two. The income from the trust paid to the charity of your choice. At the end of the trust term, the assets pass to beneficiaries named by the donor. The donors choose the trustee.

You can fund a charitable lead trust with cash, publicly traded securities, closely-held stock, income-producing real estate, partnership interests, or a combination of the above. You can establish a charitable lead trust during your lifetime, or as a testamentary trust through your will. A lead trust may be structured to provide a fixed dollar contribution annually (CLAT) or a fixed percentage contribution (CLUT).

Two Types of Lead Trusts
There are two basic types of Lead Trusts: Non-Grantor and Grantor.

In a non-grantor CLT, the most common type, the trust assets revert to your children, grandchildren, or other heirs at the end of the trust term. A non-grantor charitable lead trust provides a gift tax charity deduction and is useful in reducing the cost of intergenerational wealth transfers.

In a grantor CLT, the trust assets revert to you, rather than to your heirs, at the end of the trust term. Donors creating grantor charitable lead trusts receive a large charitable contribution income tax deduction. Such a gift structure may be particularly useful if you wish to make a multi-year pledge and accelerate future deductions into the current year.

What Are The Advantages of a Non-Grantor CLT?
For people who have significant assets, a charitable lead trust provides gift and estate tax relief:

1. You receive a charitable gift tax deduction for the present value of the annual trust payments to the charity. The amount of this gift tax deduction is typically a large percentage of the total assets contributed to a lead trust, leaving only a small portion of the gift amount subject to the gift tax.
2. Because the gift tax deduction and the amount subject to gift tax is determined at the time the assets are contributed to the lead trust, any appreciation of the assets that takes place during the term of the trust is not subject to additional gift or estate tax. As a result, the amount that you ultimately transfer to your heirs may be much larger than the amount upon which the gift tax is imposed.
3. None of the income earned by a lead trust is taxable to the grantor; therefore, the grantor also does not receive a charitable income tax deduction. In effect, this results in a reduction of your taxable income over the trust term.
4. The assets you contribute to a lead trust are removed from your taxable estate, reducing your estate tax exposure.
5. Unlike most other gift planning arrangements, the benefits of a lead trust are immediate to the charity. Payments from a lead trust can be used to fund operating costs and other programs as well as endowed funds.

 

How Do I Create a CLT?
Donors establishing a charitable lead trust should be advised by an attorney who is experienced in the area of charitable trust funds and estate planning. Please contact us by phone or e-mail so that we can assist you or use our response/request form.

Return to story on Charitable Lead Trusts.

How can income from your charitable trusts or other gifts of charity help in the fight against addiction?   

The Brighton National Addiction Foundation (BNAF) seeks your charitable gifts and trusts to support its fight against all forms of substance abuse.  Dedicated to the mission of Brighton Hospital, one of America’s oldest and most experienced substance abuse treatment facilities and the first to be licensed in Michigan, the Foundation offers ways for individuals, corporations and grant makers to invest in our national leadership through charitable trusts.  Income received through your trusts and gifts allow us to continue to be a leading source of hope through prevention, patient care, aftercare, education and research. By establishing a charitable trust for the BNAF, you can play a pivotal role in the fight against chemical dependency.  There are many philanthropic opportunities available for you to be part of the solution.

It is with great pleasure that Brighton Hospital welcomes the philanthropic leadership of the Brighton National Addiction Foundation.

 Board of Trustees

"Brighton Hospital has had strong relationships with families throughout the United States and Canada for many years", comments Richard Kramer, President of the BNAF.  "These relationships, built on the importance of effective 12 step recovery programs and innovative treatments of these chronic diseases, are vital to the continual success of the hospital."

Supporting our charity with income through gifts and trusts will help us:

• Build and expand the Brighton Hospital health care facilities.  The hospital has a campus exceeding 90 acres including Lake Serenity, wooded areas, and historic structures.  Treatment facilities all need updating and restoration to keep pace with hospital innovations and expansion.

 

• Help patients who need added days of rehabilitation.  In the world of alcohol and substance abuse, detoxification, and rehabilitation, research has shown a clear correlation between the length of stay in a rehabilitation center and the long-term success of the patient’s recovery.  Insurance carriers, however, do not reimburse behavioral health and rehabilitation from substance abuse as generously as they cover a patient’s medical and surgical needs.  The Patient Extended Care fund provides for this gap.

 

• Provide continuing education opportunities for our drug and alcohol treatment staff.  Inaugurated in 2006, the Brighton Hospital Addiction Fellowship is America’s first clinically based addiction fellowship program.  It increases the quality and quantity of medical staff and supports the vision of the hospital as a national center of excellence and an innovator in alcohol and drug treatment and education.

 

• Help collaborate research programs with leading medical and nursing schools.  Funds are needed to sponsor research programs while they develop the resources needed to apply for extramural grants from government agencies and foundations.

 

• Provide scholarships for our youth drug and alcohol treatment services.  Through regional partnership, the Teen Drug Rehab Program enables more teens, ages 13-17, and their families to get the help they desperately need.  Scholarships provide assessment, intensive outpatient treatment for three months and aftercare.

 

• Fund and continue a variety of other programs, such as our clergy recovery series, our 30-day residential treatment series, our halfway house expansions, the restoration of our 1939 chapel, and the relocation and expansion of the gift shop and bookstore, all which keep us a leader in drug and alcohol treatment, and the rehabilitation center of choice over other highly regarded chemical dependency hospitals.

 

Our Philanthropic partners are people like you who have enriched their own lives while providing for the needs of others by supporting our charity with income through gifts and trusts.  There are a variety of ways that you can both provide for your own financial security and offer philanthropic support to our hospital by establishing a charitable trust for the BNAF.  In addition, the emotional rewards, which can only be described by those who have felt them, make supporting us a life-changing experience.

Thank you so much for your interest in the Brighton National Addiction Foundation and supporting our philanthropic mission with your gifts of charity.  For more information on planned gifts through wills and bequests, real estate, retirement assets, charitable lead trusts, appreciated stock, charitable remainder trusts and life insurance, contact foundation@brightonhospital.org.  Supported by your charitable trusts and gifts, we will build upon this lead for the sake of all who look to us for caring, compassion and clinical excellence in the face of addiction, a life-threatening, chronic disease.

The Brighton National Addiction Foundation is a 501(c)(3) organization as classified by the Internal Revenue Service. Contributions are tax-deductible to the limits allowed by law for non-profit donations.  Organizations exempt under section 501(c)(3) are further classified as either public charities or private foundations.  The BNAF is treated as a public charity and is qualified to receive tax-deductible bequests, devises, transfers and gifts. 

Please note that we use pop-up windows for some of our links. If you have pop-ups blocked, holding down the CTRL key (or sometimes the SHIFT key) while clicking on these links will often allow the pages to open without having to disable pop-up blocking on your computer.

Please note that individual financial circumstances will vary. The information on this site does not constitute legal or tax advice. Donor stories and photographs are for purposes of illustration only. As with all tax and estate planning, please consult your attorney or estate specialist.