Charitable
Lead Trusts
A charitable lead trust allows you to enjoy tax benefits from supporting Big Bend Conservancy, without giving up assets you wish to leave to your family. The trust provides steady support for Big Bend Conservancy's work now, with the remaining assets eventually passing to your loved ones.
How It Works
You can structure your charitable lead trust in one of two ways:
A Charitable Lead Annuity Trust (CLAT) makes fixed yearly payments to a chosen charity for a set number of years, with any remaining assets then going to the donor’s heirs. The payments can be structured so the gift passes to family with little or no gift or estate tax. If the assets grow faster than the IRS’s assumed rate, that growth transfers to heirs tax-free.
A Charitable Lead Unitrust (CLUT) instead pays the charity a set percentage of the trust’s value each year, recalculated annually. This means the payments rise or fall depending on investment performance, offering flexibility in changing markets.
Both options allow you to make a lasting difference for Big Bend Conservancy while providing long-term financial benefits for your family.
Example
Charitable Lead Annuity Trust
At 65, Carolyn wants to use part of her substantial stock portfolio to help both her family and the place she loves most, Big Bend.
She sets up a Charitable Lead Annuity Trust (CLAT) with $3 million in appreciated stock, arranging for fixed annual payments of $249,000 to go to Big Bend Conservancy for 15 years. Her advisor structures the plan so that, for tax purposes, the gift to her children counts as $0, allowing her to move the asset out of her estate without paying gift or estate taxes.
Over the 15-year term, the Conservancy receives more than $3.7 million* to support its work protecting Big Bend’s landscapes and wildlife. Meanwhile, the stock inside the trust continues to grow at about 8% per year. When the trust ends, the remaining balance, roughly $3.76 million, goes to Carolyn’s children tax-free.
The CLAT gives Carolyn a way to create steady support for Big Bend while sustaining a meaningful legacy for her family.
*For Illustration Only: This content uses hypothetical figures and scenarios to demonstrate potential outcomes. Actual results will vary based on the IRS Section 7520 rate, market performance, and the ages of beneficiaries. It is not financial, legal, or tax advice. Consult a qualified professional for guidance specific to your situation.
Charitable Lead Unitrust
At 55, Andrea and Tim are looking for a way to pass their highly appreciated stock to their adult children while continuing to support one of their favorite places, Big Bend National Park. Longtime visitors and advocates, they decide to create a Charitable Lead Unitrust (CLUT) with the Big Bend Conservancy as the charitable beneficiary. Confident their investments will continue to grow, they like that a CLUT allows their giving to increase alongside their portfolio’s success.
They fund the trust with $1.5 million in appreciated stock and set it to make annual payments equal to 8% of the trust’s value, recalculated each year, for 18 years. In the first year, Big Bend Conservancy receives $120,000*. When the trust’s value rises, so does the Conservancy’s annual payment, providing a flexible and sustainable stream of support for conservation, habitat protection, and park initiatives.
Because the trust is structured carefully, the IRS treats the transfer to their children as a $0 taxable gift, allowing Andrea and Tim to remove the asset from their taxable estate while supporting a cause they love.
Over 18 years, the Conservancy benefits from more than $2.6 million in total distributions. Meanwhile, the assets inside the trust continue to grow at an average annual rate of 8%. When the term ends, the remaining principal has grown to approximately $2.3 million, which passes to Andrea and Tim’s children free of gift and estate tax.
Their CLUT becomes both a lasting investment in Big Bend’s future and a meaningful way to strengthen their family’s legacy.
*For Illustration Only: This content uses hypothetical figures and scenarios to demonstrate potential outcomes. Actual results will vary based on the IRS Section 7520 rate, market performance, and the ages of beneficiaries. It is not financial, legal, or tax advice. Consult a qualified professional for guidance specific to your situation.
Interested in receiving more information?
Please email Loren Riemer, our Executive Director, at director@bigbendconservancy.org and express that you're interested in learning more about planned giving and you were looking at charitable lead trusts.
We'd love to work with you!