If a donor is interested in making a gift to TMI but does not wish to give up income from specific assets, the donor might consider making a gift in trust. This method allows the donor to make a current gift to the school while retaining an income for life, and if desired, for the life of a spouse or other beneficiary. Depending on whether the donor wishes to make a gift from which he/she will receive income or a gift which would give income to TMI and the remainder to his or her children or grandchildren, the following methods are available:
- Charitable Lead Trust
This type of trust is suited to a donor who wishes to establish a trust to benefit TMI for a period of years, transferring cash or other assets to a trustee who invests the amount transferred and pays income to TMI for a period designated by the donor. When the trust terminates, the principal is transferred to a donor's children or grandchildren at what may be significant gift and estate tax savings.
- Charitable Remainder Trust
The type of trust is ideally suited to a donor with sizable assets who would like to donate to TMI without relinquishing the enjoyment or income associated with the assets. Under this type of trust, the assets are placed in trust for the benefit of the school while a fixed percent of the trust or annuity is paid to the donor, a family member, or other beneficiary. The donor may choose to have income paid for the life of a beneficiary or for a certain number of years. At the end of this time, the assets of the trust are transferred to the school.
A charitable remainder trust offers an immediate charitable deduction and the flexibility of allowing a donor to transfer most types of property to the trust without paying capital gains tax. Highly appreciated assets may be sold through the trust to increase the income generated. Under certain circumstances, the value of the trust will not be taxable for federal estate tax purposes.