The charitable midterm federal rate (the interest rate used in calculating the amount of the gift subject to tax) was the lowest it has ever been in the last two years. The rates are still low, meaning a higher tax savings for funding a charitable lead trust. The best gift tax breaks, combined with assets that may be depressed in value temporarily, create the perfect opportunity to consider a lead trust.
The tax savings is in the form of gift-estate taxes,1 not income taxes. So this strategy may be right for you if you're in a situation where your wealth would most likely be subject to estate taxes at your death. Creating a charitable lead trust can provide you with significant tax relief while providing us with financial support.
Your legal and tax advisors can help you determine whether a charitable lead trust is right for you. We're also happy to answer any questions you may have. Just contact Development Office at 323-761-8704 or development@jewishfoundationla.org.
1Currently federal estate taxes are repealed for all deaths that occur in the calendar year 2010. In 2011, estate taxes are scheduled to be reinstated for estates worth more than $1 million at rates up to 55 percent. Congress, however, is likely to address reinstating estate taxes sooner than 2011. What the final legislation will look like and when it might become effective is unknown at this point.