Charitable Lead Trust What is a charitable lead trust? A grantor charitable lead trust is a gift plan defined by federal tax law that allows you to retain ultimate possession of an asset while making a generous gift to Northern Illinois University Foundation. As a grantor lead trust donor, you transfer assets, usually cash or securities, to a trustee of your choice. During the lead trust's term, the trustee invests the trust's assets. Each year, the trustee pays a fixed percentage of the trust's current value, as revalued annually, to Northern Illinois University Foundation. If the trust's value goes up from one year to the next, its payout to Northern Illinois University Foundation increases proportionately. Likewise, if the trust's value goes down, the amount it donates also goes down. These payments are used for the charitable purpose you designate. Although the grantor trust's term may be for one or more lifetimes, a specific number of years (10-20 years is common) is almost always used. Payments are made out of trust income, or trust principal if the trust income is not adequate. When the grantor lead trust term ends, its charitable payments cease and the trust returns all of its accumulated assets back to you. Because you retain ultimate possession of a grantor lead trust's assets, all taxable income earned by the trust during its term, including income distributed to Northern Illinois University Foundation, is taxable to you. For this reason, grantor lead trusts sometimes are invested to earn tax-free income.You may add funds to your unitrust whenever you like. Benefits include: 1. You will qualify for a federal income tax deduction. Note that deductions for gifts of long-term appreciated property will be limited to 20% of your adjusted gross income and gifts of cash and non-appreciated property will be limited to 30% of your adjusted gross income. You may, if necessary, take unused deductions of either kind over the next five years, subject to the same 20% or 30% limitation. 2. Northern Illinois University Foundation will receive annual payments from your trust for a term of years, or for another term you designate. 3. You will receive all of the trust's assets when the trust terminates, including any appreciation that has occurred during the trust term. For more information, please contact John Bass, director of gift and estate planning, at 815-753-1859 or e-mail jbass@niu.edu.