Provide for Your Loved Ones and NIU
Charitable Lead Trusts
Discover which type of charitable trust best fits your estate plan with the FREE guide Trusts: Choose From 2 Win-Win Ways to Donate.
Do you want to benefit from the tax savings that result from making a gift to the NIU Foundation, yet you don't want to give up any assets that you'd like your family to receive someday? You can have it both ways with a charitable lead trust.
There are two ways charitable lead trusts make payments:
A charitable lead annuity trust pays a fixed amount each year to the NIU Foundation 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 the NIU Foundation go up as well.
Check Out This Potential Scenario
George would like to make a gift to the NIU Foundation and provide for his children. George received a windfall amount of income and needs a large income tax deduction to offset the income. Following his advisor's recommendation, George funds a grantor charitable lead annuity trust with assets valued at $1,000,000. George's trust pays $70,000 (7 percent of the initial fair market value) to the NIU Foundation each year for 15 years, which will total $1,050,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $854,311. Assuming the trust earns an average 6 percent annual rate of return, George receives approximately $767,240 at the end of the trust term.
*Assuming annual payments and a 3.2 percent charitable midterm federal rate.
Learn How to Fund It
You can use the following assets to fund a charitable lead trust:
Calculate Your Benefits
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Northern Illinois University has designated the NIU Foundation as the charitable organization to receive and manage all gifts on its behalf.
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.
A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.
You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to the NIU Foundation as a lump sum.
You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to the NIU Foundation as a lump sum.