Make a substantial gift to the Missouri Botanical Garden in the form of fixed annual payments and pass assets to your family or other heirs at reduced tax cost.

A charitable lead annuity trust may be right for you if:

  • You have substantial assets that you do not need for your own financial security.
  • You would like to provide for your family or other heirs.
  • You would like to save gift taxes, estate taxes, and probate costs.
  • You want your gift to make a difference at the Garden starting immediately.
  • You could consider a gift of $250,000 or more to benefit the Garden and your heirs.

 

 

 

How Your Gift Helps

Your gifts to the Missouri Botanical Garden help us inspire and educate all members of our local region about the benefits of being good environmental stewards through responsible and sustainable use of natural resources. It will provide the Garden with the resources to:

How your gift helps How your gift helps How your gift helps
Spark creativity through classes, educational offerings, and partnerships with local schools. Protect plants by allowing researchers to explore flora, discovering and preserving rare species. Restore natural landscapes through ecological partnerships and shared expertise.

 

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Separate trust

A charitable lead annuity trust is a separate taxable trust governed by an irrevocable trust agreement. You choose the trustee who is responsible for administering your lead trust and guiding the investment of its assets.

Make fixed payments to the Garden each year

Your lead annuity trust makes payments to the Garden each year of a fixed amount for the duration of its term. Your lead trust can make payments to more than one charity, if you wish.

You choose the payment amount

You choose the amount that your lead annuity trust must distribute each year. A payout equal to 5% to 7% of the trust's initial value is typical. Payments are usually made in annual installments, but semiannual, quarterly, or monthly installments are possible. 

Remaining assets to heirs

When your charitable lead annuity trust ends, all remaining principal in the trust will be transferred to family members or other heirs you choose.

Term flexibility

While most annuity trusts last for 10-20 years, other terms are possible. A lead annuity trust can last for one or more lives, for a specific length of time, or for a combination of lives and years. The term length you choose will depend on when you want your heirs to receive their trust distribution, as well as other factors.

Tax benefits

  • Reduce or eliminate gift or estate tax on gift to heirs if your estate exceeds the then applicable estate tax credit. 
  • Avoid all gift and estate tax on asset growth.

When you transfer assets to your lead annuity trust, you make a taxable gift to the individuals who will receive your trusts principal when it ends. However, your gift of payments to the Garden earns you a gift or estate tax charitable deduction in the year of your gift that will reduce, and in some casescases, eliminate, your taxable gift if your estate exceeds the then applicable estate tax credit.

Some lead annuity trust donors make a point of picking a term length and payout rate that reduces their taxable gift to zero. Doing so eliminates any possibility that they will have to pay gift or estate tax on their gift.

In addition, the assets in your lead annuity trust are removed from your taxable estate. This means that any growth in the value of your trust's assets during its term can be passed on to your heirs completely free of gift and estate taxes.

Taxation of the trust

A lead annuity trust is a taxable trust. However, a lead trust pays income tax only if its income exceeds the amount it pays to the Garden during the year. A careful trustee can balance your lead annuity trust's income against its charitable payments in order to minimize income taxes.

Lead annuity trusts for grandchildren

Lead annuity trusts for the benefit of grandchildren present special tax planning challenges related to a tax called the generation skipping tax. For example, you may want to consider creating a charitable lead unitrust in this situation, as it is easier to plan for generation skipping tax issues when creating a lead unitrust than when creating a lead annuity trust. Please be sure to talk to your advisors or to us about these tax considerations. 

Suitable funding assets

You can fund your lead annuity trust with many different kinds of assets. All of the following assets can work well:

  • cash
  • securities
  • a closely-held business
  • commercial property
  • a combination of these assets

Assets that are likely to increase substantially in value over time can be especially attractive candidates for transfer into a lead trust. You will want to work closely with your advisors to pick an asset or combination of assets that will best achieve your goals for your gift.

Example

David Blackburn spent his career building a successful manufacturing business, which he sold a few years ago for $10,000,000. He and his wife, Simone, have three children who are in their 30s. David has been reviewing his estate plan with an eye toward adding a major gift to the Garden. Funding a charitable lead annuity trust offers an excellent way for David to provide generous support to the Garden and pass assets to his three children. David chooses to create a $2,000,000 trust that will pay $130,000 to the Garden each year for 20 years.

Benefits

  • The Blackburns' three children will split approximately $2,409,955* when the trust ends.
  • The Blackburns will earn a gift tax charitable deduction of $1,592,962**.
  • The assets used to fund the trust will not be taxable in their estate.
  • the Garden will receive $2,600,000 from the trust over 20 years.

* Assumes the trust assets earn a 7% annual net return.
** The Blackburns' charitable deduction may vary depending on the timing of their gift.