A non-grantor charitable lead annuity trust is a gift plan defined by federal tax law that allows you to transfer assets to your family at reduced tax cost while making a generous gift to Salus University or one of its Colleges. At this time the foundation that receives all contributions in support of the University and its Colleges continues to be named the Pennsylvania College of Optometry Foundation. Trusts that benefit the University or one of its Colleges should still be designated to the PCO Foundation.
As a lead annuity trust donor, you irrevocably transfer assets, usually cash or securities, to a trustee of your choice (for example a bank trust department). During the trust's term, usually a fixed number of years, the trustee invests the trust's assets. The trustee distributes a fixed dollar amount each year to Pennsylvania College of Optometry Foundation. These payments are used for the charitable purpose you designate and are made out of trust income, or trust principal if the trust income is not adequate. If trust income for a given year exceeds the annual charitable payment, the trust pays income tax on the excess.
When the lead annuity trust term ends, its charitable payments cease and the trust distributes all of its accumulated assets to family members or other beneficiaries named by you.
Example: If you irrevocably transfer $50,000 in cash to a non-grantor lead annuity trust that pays 7% of its initial value each year to Pennsylvania College of Optometry Foundation for the lifetime of an individual, age 72,
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- You will qualify for a federal gift tax deduction of approximately $31,328. Your deduction may vary modestly depending on the timing of your gift.
- Pennsylvania College of Optometry Foundation will receive fixed payments in quarterly installments totaling $3,500 each year to benefit Salus University or one of its Colleges.
- The beneficiaries of your trust (for example, family members) will receive all of the trust's assets when the trust terminates. Any asset growth that occurs within the trust will be distributed to your trust's beneficiaries free of gift or estate tax.
- Your gift will benefit from expert asset management.