Charitable Lead Trusts

A charitable lead trust offers donors a way to make a substantial gift to New York University School of Medicine or NYU Hospitals Center and at the same time maximize the inheritance they may leave to their heirs free, or nearly free, from estate tax. These trusts are most effective in a low interest rate environment.

A lead trust is the opposite of a remainder trust, where the remainder goes to charity. With a lead trust, the trust pays income to our Langone Medical Center for a term of years, usually around 20, or for the life of the donor. When the trust terminates, the remainder of the trust either passes to your children or other designated beneficiary or reverts to you.

Remainder passes to heirs:

• If the remaining trust principal and any appreciation passes to your heirs, there should be little or no estate tax liability as the tax has been zeroed out when the trust was formed.
• You do not receive a tax deduction when the trust is created.

Remainder reverts to you, the donor:

• If the remaining trust principal reverts to you, the donor, then you would receive a substantial charitable tax deduction in the year you created the trust. The deduction is based upon the present value of the income stream that will be paid to the Medical Center over the life of the trust.
• Rather than take deductions for the trust’s charitable gifts year by year, the donor can claim the deduction in one year which is particularly helpful for a donor who may want to offset an unusually large amount of taxable income received that year.

We recommend that you consult with your legal and financial advisors when considering establishing a Charitable Lead Trust. To learn more about making these trusts, please contact the planned giving staff at 212-404-3653 or 800-422-4483, or by e-mail at plannedgiving@nyumc.org.