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© The Stelter Company The information in this publication is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Joe Lisella Director of Development 171 Bel Marin Keys Blvd. Novato, CA 94949 415.506.6257 2] Charitable Lead Trust: Reduce Taxes and Leave an Inheritance for Your Heirs With a charitable lead trust you transfer cash or assets, which are appreciating in value, into a trust you create with the intention of supporting Marin Humane first and then returning the remaining assets to your family. It's a tool that helps preserve family wealth. The major benefit of creating a charitable lead trust is in transferring assets to family members at very little gift or estate tax costs. Using a lead trust, you could potentially pay a relatively small gift tax for eventually transferring a large amount of assets to your children. This type of gift provides you with a gift tax deduction, not an income tax deduction. Types of Charitable Payments Your transfer to the trust is treated as two separate gifts. The first gift is to us in the form of an annual payment. The second gift is the remainder interest that your family will ultimately receive. To receive a transfer tax deduction for the charitable payment, it must be either: • An annuity payment: With this type of payment, we receive the same amount annually whether the trust assets appreciate or depreciate. If the trust income is insufficient, the trustee uses principal to make up the difference. • A unitrust payment: With this option, we receive a variable amount based on a specified percentage of the fair market value of the trust assets, valued annually. You set the percentage upon creating the trust. The payments fluctuate with trust appreciation or depreciation. If the trust income is insufficient, the trustee uses principal to make up the difference. We are here to help you. Contact us with any questions you have about creating a trust that benefits you and Marin Humane. Charitable Remainder Trust vs. Lead Trust The main difference between a charitable remainder trust and a charitable lead trust is when we receive your gift. With a remainder trust, we receive the remainder after your lifetime or a term of years. With a lead trust, we receive our gift first, with the remainder going to individuals you choose.

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