Many Ducks would like to make a more substantial contribution to the current Campaign Oregon if they had greater cash flow to first address their personal concerns of providing for their family or their own retirement. Funding a charitable remainder trust (CRT) is one way to accomplish your personal financial goals and make a tremendous impact upon the UO. In short, a CRT gives you another option rather than selling a highly appreciated asset (most commonly real property or stock) and paying substantial federal and state income capital gains taxes. By contributing the appreciated asset into a CRT, the CRT can sell the asset without paying any income taxes. Consequently, without paying any income taxes, the CRT will have a larger principal balance to invest and make payments to you. Furthermore, since the terms of the CRT direct the principal balance to be paid to charity after the term of the CRT (typically the donors’ lifetime), you receive an income tax deduction and the UO (and other specified charities) will ultimately receive substantial support from the principal balance of the CRT.

A quick example:

A sixty-year old Duck has $200,000 in Nike stock that she purchased for $20,000 many years ago. While she enjoys being invited to the annual shareholders meeting, the only other benefit she is currently receiving is the 1% dividend of $2,000 per year. Not wanting to pay federal and state capital gains taxes on the stock, she wisely contributes the stock to a 6% charitable remainder unitrust. Our wise Duck will receive an income tax charitable deduction of approximately $68,000 and receive a payment of $12,000 (6% of $200,000) in the next year. If the CRT earned on average 10% over the next twenty years, the CRT principal would grow to approximately $500,000, enabling her payments to gradually increase to $30,000 (6% of $500,000). Of course, the principal balance of potentially more than $500,000, in this example, would ultimately be distributed to the University of Oregon!

For questions about this article and other creative ways to save taxes and increase your cash flow while supporting the University of Oregon, please contact Hal Abrams, J.D., LL.M. at (541) 346-6084 or abrams@uoregon.edu or David Gant, J.D. at (541) 346-2333 or dgant@uoregon.edu.

GIVING TIPS FROM THE OFFICE OF GIFT PLANNING

This is a giving tip from the University’s Office of Gift Planning. These tips are designed to better inform you of opportunities to support the University of Oregon, and illustrate available incentives provided by the IRS.