What Is a Charitable Lead Trust?
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A charitable lead trust is a separately invested, irrevocable trust you create by transferring cash, marketable securities, or income-producing property to a trustee you select. The trustee may be Oberlin College, one or more individuals, a bank, or a combination of these. You designate Oberlin as the beneficiary of income for a specified period of years or for a period measured by a named person’s life. Upon completion of that period, the trust assets may revert to you or pass to persons you have designated in the trust instrument to receive them.

A unique feature of a charitable lead trust is that you may tailor Oberlin’s income interest. A charitable lead unitrust pays an annual income equal to a percentage of the value of the principal; you select that percentage when you create the trust, and the trustee revalues the trust each year to determine that year’s income. A charitable lead annuity trust pays a fixed dollar amount each year; you specify that amount when you establish the trust.

Income Tax Consequences of Establishing a Charitable Lead Trust
The charitable deduction associated with the creation of a charitable lead trust depends on your relationship to that trust. You will need to consult with your tax advisor to determine the character of that relationship. Under certain circumstances, you will be eligible for a charitable deduction in the year you create the trust equal to the present value of Oberlin’s income stream. You will also be required each year to include any income earned by the trust in your income. Under other circumstances, you will not be eligible for a current charitable deduction, and you will not include the trust’s income in your own. This consequence is particularly useful to a person who wishes to contribute amounts in excess of the allowable deduction levels for income tax purposes.

Taking the next step:

To learn more about charitable lead trusts, please contact the Gift Planning staff at gift.planning@oberlin.edu or 440-775-8599. We also encourage you to fill out the request for more information form so we may better assist you.

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