Charitable Lead Trust


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Protect Your Assets

You can benefit from the tax savings that result from supporting University of Minnesota Duluth without giving up the assets that you'd like your family to receive someday with a donation in the form of a charitable lead trust.

There are two ways that charitable lead trusts make payments to UMD:

A charitable lead annuity trust pays a fixed amount each year to UMD 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 UMD go up as well.

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An Example of How It Works

Father smiling with childrenGeorge would like to support UMD 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 UMD 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 $873,110. Assuming the trust earns an average 6 percent annual rate of return, George receives approximately $767,240 at the end of the trust term.

George's trust pays $175,000 (7 percent of the initial fair market value) to UMD each year for 15 years, which will total $2,625,000. After that, the balance in the trust goes to his children. Assuming a 6 percent investment return, the children will receive approximately $1,918,101.

*Assuming annual payments and a 2.4 percent charitable midterm federal rate.

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Next Steps

  1. Contact Tricia Bunten at 218-726-7989 or 866-726-7110 (toll free) or umddev@d.umn.edu to talk about supporting UMD by setting up a charitable lead trust.
  2. Seek the advice of your financial or legal advisor.
  3. If you include UMD in your plans, please use our legal name and federal tax ID.

Legal Name: University of Minnesota Foundation
Address: 200 Oak Street SE, Suite 500, Minneapolis, MN 55455
Federal Tax ID Number: 41-6042488