Charitable Lead Trust

Protect Your Assets

A charitable lead trust can help you transfer assets to your heirs in a tax-efficient manner and make a significant gift to Northwestern. Lead trusts are complex tax planning and philanthropic arrangements that may have numerous legal and tax implications.

How It Works

You establish a lead trust at Northwestern with a minimum gift of $250,000.
The lead trust makes annual payments to Northwestern for a fixed number of years (generally 10–20).
A lead trust tends to be more effective when it is in place for a longer period of time, providing an opportunity for its assets to appreciate in value.
At the end of the trust term, the remaining assets transfer back to you (in the case of a grantor lead trust) or, more typically, to your beneficiaries (in the case of a non-grantor lead trust).
You can designate lead trust payments to support a specific school or program at Northwestern.
You can set up a lead trust during your lifetime or through your estate.

Benefits

When structured properly, especially in a low interest-rate environment, a non-grantor lead trust may allow you to transfer assets to heirs with reduced or no gift tax. In a low interest-rate environment, a grantor lead trust could allow you to make a significant gift to Northwestern, receive a tax deduction, and receive many or all of the assets back at the trust’s termination.
The assets that are transferred to your beneficiaries at the end of the trust term do not pass through your estate.
Establishing a lead trust during your lifetime allows you to make payments toward a single gift initiative, such as a building project or scholarship fund.
Northwestern receives regular payments from the lead trust, so you can witness the good work your gift makes possible.

Discover More

Find out which type of charitable trust best fits your estate plan with the guide Trusts: Choose From Two Ways to Donate.

An Example of How It Works

Father smiling with children George would like to support Northwestern and receive tax benefits. 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 $60,000 (6% of the initial fair market value) to Northwestern each year for 15 years, which will total $900,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $614,445. Assuming the trust earns an average 8% annual rate of return, George receives approximately $1,600,286 at the end of the trust term.

*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.

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Next Steps

Contact Northwestern Gift Planning at 800-826-6709 or giftplanning@northwestern.edu to talk about supporting Northwestern by setting up a charitable lead trust.
Seek the advice of your financial or legal advisor.
If you include Northwestern in your plans, please use our legal name and federal tax ID.

Legal name: Northwestern University
Address: 633 Clark Street, Evanston, Illinois 60208
Federal tax ID number: Please contact us for our federal tax ID number.