Collaboration is the Key to Success
UF’s Office of Estate and Gift Planning often works closely with a donor’s professional advisors to ensure that a gift accomplishes the donor’s tax and financial planning goals while making the most significant impact at the university. We recently partnered with the advisors of a UF alumnus* to establish a charitable remainder trust (CRT) funded with real estate that accomplished the donor’s desire to give back to UF while addressing near-term retirement and tax objectives and longer-term estate plans. The donation will ultimately support UF’s Herbert Wertheim College of Engineering.
It started like many donor conversations, a thank you for previous gifts and an update from the college. Keith Emrick, Senior Director of Development, has known the donor for several years, and the two meet regularly to catch up and discuss what’s happening within the college. During this conversation, Mr. Emrick discovered that the donor and his professional advisor, a Certified Financial Planner and Certified Public Accountant, were working on ways to address estate planning objectives while meeting long-term retirement needs and managing near-term tax issues. Mr. Emrick brought up the idea of a CRT and set up a meeting between the donor and his advisor with Mike Sopko from UF’s Office of Estate and Gift Planning. With her diverse background and expertise, the financial advisor was familiar with this gift planning concept and was interested in seeing the benefits of a CRT for the donor’s retirement, estate and tax planning.
“The team at UFF was very helpful in tailoring an approach that was compatible with my client’s particular situation,” recalled the financial advisor. “They also provided support throughout the process to my client’s legal and tax advisors. The UFF team worked with us to assure that my client was able to make a meaningful donation to UF that supports students in the College of Engineering while helping him address near-term and long-term financial and estate objectives.”
Over the next few weeks, discussions continued and Mr. Sopko provided customized CRT illustrations to help with the decision-making process. The donor was considering a gift of appreciated land held within the family for over 20 years in the St. Augustine area. Understanding the tax implications of selling the land outright versus transferring the assets to a CRT was an important consideration. The CRT provided the donor with an opportunity to transfer the land to the trust, obtain a charitable deduction for the 2020 tax year, and provide him with an annual income stream moving forward. The donor related that “the most attractive aspect of the CRT was that it allowed me a means of giving back to UF, which has been an important part of my family’s lives for three generations. Additionally, the CRT is compatible with my long-term retirement and estate plans.”
The CRT option is becoming a more common strategy for donors with appreciated land or securities. UF’s Office of Estate and Gift Planning team can provide customized illustrations and technical information regarding complex gift vehicles for donors to review with their advisors. In addition, the UF Foundation’s legal team is often instrumental to the conversations with a donor’s professional advisors.
As the CRT discussions moved forward, UF’s Office of Estate and Gift Planning and the UF Foundation’s legal team maintained consistent communication with the donor and his advisors, and when the time was right, the donor’s real estate attorney, also a UF alumnus, joined the conversations to handle the initial legal work on the property, review the trust document that was drafted by the UF Foundation’s legal counsel, and ultimately transfer the property to the CRT.
When establishing a CRT, the donor designates the trustee, which can be a professional advisor, a trust company, or the donor. The UF Foundation can also serve as trustee as long as at least 50% of the remainder interest is designated for programs at UF. The UF Foundation partners with TIAA-Kaspick for trust management services.
The purpose of the gift is an important consideration for all parties as well. The college’s advancement team, along with the gift planning team, can help donors identify philanthropic opportunities and needs now and in the future. A lifetime partnership was created with this gift, which would not have happened without the coordination of multiple teams at UF and the donor’s professional advisors, and everyone involved looks forward to working together for many years ahead.
*The donor referred to in this article requested anonymity for himself and his advisors.