July 2009

How a CLT Worked for a Donor

Scott Magee (Courtesy of Scott Magee)

Here is a case study of a client for whom Long Beach attorney Scott Magee set up a charitable lead trust (CLT), which benefits a donor advised fund at CCF. Magee had known about CCF for years through his involvement with the South Bay and Long Beach Estate Planning Councils:

Animal-lovers Mrs. Y and her husband made their fortune by developing a pet product and building it into a multimillion dollar business. After her husband died, Mrs. Y sold the business and turned to Magee to develop an estate plan, which included a CLT. A CLT appealed to her as she wanted to leave as much as she could to her then-teenage grandson over time and also benefit charity – animal welfare and religious organizations. She set up a 20-year CLT with $1 million in 2004 and each year, benefits a CCF fund with $40,000 generated by the CLT’s interest income. By 2024, as long as the income/gains on the CLT’s investments do better than or equal 4 percent, a total of $800,000 will have gone to charity, and Mrs. Y’s grandson will get the remaining assets of at least $1 million.

Magee said the CLT helped his clients and heirs think about charitable giving. Mrs. Y passed away in 2006 and her daughter and grandson today run a private foundation that she created.

Mrs. Y had a “Depression-era mentality. Even though her estate was sizeable, she never felt she had enough and she was always worried she was going to run out some day. She was a very nice person who lived very simply,” said Magee.

Although everyone has been hurt by the economy, Magee said many of his clients are optimistic about the future. Mrs. Y’s case is ideal for a CLT – a way to benefit charity that is meaningful to your clients and ultimately have the assets pass to their children and grandchildren.

Attorney Scott R. Magee, of Magee & Adler, has 20 years of experience planning complex estates and assisting trustees in the administration of trusts. Contact him at (562) 432-1053 or scott@mageeadler.com.