If you are looking for a way to pass on some of your assets to your family while reducing or eliminating gift or estate taxes, a charitable lead trust is an excellent option.
You make a contribution of your property to fund a trust that pays Purdue income for a number of years. You receive a gift or estate tax deduction at the time of your gift. After a period of time, your family receives the trust assets plus any additional growth in value.
Contact Marcus Knotts at maknotts@purdueforlife.org.
It is possible to set up a lead trust that will allow you to transfer assets to your family with zero transfer taxes. The IRS assumes that a lead trust is only earning at the current low federal rate. If the actual investments of the trust produce a higher return than the payments made to Purdue over the term of the trust, the full value of the trust may be transferred to family with zero gift tax.
To discount your gift to family even more, you may consider first transferring your real estate or other assets into a family limited partnership (FLP), which will fund your lead trust. The combination of the FLP, the lead trust, and a gift exemption can permit the lead trust to pay income to Purdue for a number of years and potentially transfer substantial assets tax-free to your family.
With increased volatility in the stock market, you may want to create a lead trust that makes fixed payments of increasing amounts to Purdue over time. Because the payments to us are fixed, your family ultimately benefits from any growth in the trust. Low payouts in early years allow the trust to grow, thus providing protection should the economy produce below-average returns in the future.
You may also consider a grantor lead trust, which permits you to transfer your cash or assets to a trust that will make gifts to Purdue for a number of years. At the end of the trust term, you receive the assets back from the trust.
Patsy earned a bachelor’s degree in food and nutrition in business from Purdue in 1969, in addition to an MBA in food marketing from Michigan State University in 1970. She retired from Kraft Foods in 2006 after 36 years in corporate food marketing and marketing communications management.
A community volunteer, Patsy serves on the Women’s Fund of Central Indiana Advisory Board and the Purdue College of Health and Human Sciences Dean’s Leadership Council, in addition to the President’s Council Advisory Board. She is a former member of the Health and Human Sciences Alumni Board. Patsy held several offices from 2006 through 2013, including president and treasurer. She serves her community’s Discover Indianapolis Club in Fishers, holding several leadership roles for over 10 years.
Patsy has received several honors, including the Purdue University Nutrition Science Department Hall of Fame recipient in 2009 and the Purdue University College of Health and Human Sciences Distinguished Alumni Award in 2016. She also received the college’s Gold and Black Award in 2016, an honor reserved for donors who have moved the college forward by committing exceptional financial resources.
In addition to endowing two scholarships, the Patsy J. Mellott Scholarship and Patsy J. Mellott HHS Scholarship, she established the Patsy J. Mellott Teaching Innovation Award in the College of Health and Human Sciences in 2013. In 2015, she endowed the Patsy J. Mellott Women’s Tennis Coach Performance Award. She is a lead donor in the Christine M. Ladisch Faculty Leadership Award and the Purdue Women’s Network Virginia C. Meredith Scholarship for the College of Health and Human Sciences.