“Setting up a charitable lead annuity trust was enormously satisfying. For years I’ve known Pathfinder provides meaningful and effective care, resources, and education to the neediest in this underserved world. Pathfinder keeps me informed, puts the money to excellent use, and treats me as a partner – it’s a win-win relationship all around.” -- Hilary Smith
Charitable Lead Trusts
What is a Charitable Lead Trust?
A charitable lead trust holds your appreciating assets and pays income to Pathfinder International for a defined period of time. When this time ends, we return the remaining principle to you, your children or heirs. If you are in a high tax bracket, you may find the tax relief you need while supporting family planning efforts around the world.
Is it right for you?
If you have:
- minimum, appreciating assets of $1,000,000 or more,
- would like to support Pathfinder International, and
- provide for your children or heirs with the best tax situation possible, a charitable lead trust may be right for you.
If you establish a grantor lead trust with a gift of appreciating assets, you receive a one-time substantial charitable deduction when established and your trust will pay income to Pathfinder International for the life of the trust. When the term is concluded, we return the assets to you. You receive an initial charitable tax deduction equal to the income payments Pathfinder receives. Your annual earnings distributed to you by Pathfinder will be taxable to you.
If you establish a non-grantor lead trust, Pathfinder pays the balance of the principle and unrealized appreciation to your children or other heirs. If you fund it with shares from your family business, you can reduce the cost of passing ownership to your heirs. By carefully selecting the payout rate and the length of the trust’s term, you can greatly diminish or completely avoid the payment of any transfer taxes when the trust is established. Your heirs will not be taxed on any appreciation that occurs in the trust.
Policies for Charitable Lead Trusts Managed by Pathfinder
If you would like Pathfinder to serve as your trustee, we require:
- You establish your Charitable Lead Trusts with minimum assets of $1,000,000.
- You irrevocably designate more than 50% of the annual payout to Pathfinder.
- The present value of Pathfinder's income interest over the term of the trust must be at least $100,000.
- Pathfinder must have the ability to create a diversified investment portfolio, either by receiving a diversified portfolio initially from you, the donor, or by liquidating assets received from the donor in order to create the necessary diversification.
- While Pathfinder serves as trustee without charge, third party expenses such as administrative costs and investment expenses are charged back to the trust.
Please note: there is no required minimum or maximum payout percentage or term of the trust. These trusts are not tax-exempt, so Pathfinder will pay careful attention to the income tax consequences of all transactions.
Counting and Crediting Procedure
Gifts from Charitable Lead Trusts are counted and credited annually upon receipt of the income disbursement to Pathfinder. The total anticipated income from the trust is recorded in the form of a pledge when the trust is established.
To learn more or to request further details, please contact:
Vice President, External Relations