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Provide for Your Loved Ones and MSUAF

Charitable Lead Trusts

MSUDo you want to benefit from the tax savings that result from supporting Montana State University, yet you don't want to give up any assets that you'd like your family to receive someday? You can have it both ways with a charitable lead trust.

There are two ways charitable lead trusts make payments:

A charitable lead annuity trust pays a fixed amount each year to MSU and is more attractive when interest rates are low.

A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust's assets go up in value, for example, the payments to MSU go up as well.

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A possible scenario

George would like to support MSU and provide for his children. Following his advisor's recommendation, George funds a charitable lead annuity trust with assets valued at $2,500,000.

George's trust pays $175,000 (7 percent of the initial fair market value) to MSU each year for 15 years, which will total $2,625,000. After that, the balance in the trust goes to his children. Assuming a 6 percent investment return, the children will receive approximately $1,918,101.

His gift tax deduction is $2,182,775* against the $2,500,000 of assets. Therefore, only the difference ($317,225) is subject to gift tax, which is offset against his lifetime gift tax exclusion. After that, the remaining trust assets and all of their growth will pass to his family at zero additional cost in gift and estate taxes. Had George given the $2,500,000 outright to his children, it would have been a taxable gift.

*Assuming annual payments and a 2.4 percent charitable midterm federal rate.

How to Fund It

You can use the following assets to fund a charitable lead trust:

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Next Steps

  1. Contact Samantha Beebout at 406-994-7099 or samantha.beebout@msuaf.org to talk about supporting the Montana State University Alumni Foundation by setting up a charitable lead trust.
  2. Seek the advice of your financial or legal advisor.
  3. If you include Montana State University in your plans, please use our legal name and federal tax ID.

Legal Name: Montana State University Foundation, Inc.
Address: 1501 South 11th Avenue, Bozeman, MT 57915
Federal Tax ID Number: 81-6001649