PLANNED GIVING

Office of University Advancement
284 Rose Administration
Box 870122
Tuscaloosa, AL 35487
phone: (205) 348-4767
toll-free: (888) 875-4438
fax: (205) 348-8871
mailbox@advancement.ua.edu

Charitable Trusts Help You Reach Many Goals

Gorgas Library on UA campus Trusts are very flexible planning tools that can be used to accomplish a wide range of goals. Some people rely on them to reduce property management chores. Others use trusts to delay distribution of property to heirs on account of their age or for any number of other reasons.

Trusts also allow a person to arrange for their property to first be put to one use, then to another. A charitable remainder trust offers a way to arrange a meaningful gift to The University of Alabama while first providing income for yourself and/or others you name.

Here's how such a trust functions:

You, as the donor, create a trust, drafted by an appropriate professional advisor with the input of a UA representative if desired.
Cash or other property is transferred to the trust to be managed by you or another person or other entity you choose as trustee. The trustee manages the property for you, your spouse, and/or other beneficiaries you choose. The University of Alabama will serve as trustee if approved by the Board of Trustees.
Each year payments are made from the trust to you and/or other beneficiary(ies).
You receive an income tax charitable deduction and may enjoy capital gain tax savings in the year you create the trust.
Payments continue until the trust ends. The trust document specifies the time when this is to occur, such as at the death of the last beneficiary or after a stated period of time.
When the trust terminates, its assets become a gift to further the work at UA. The gift portion is known as the charitable remainder. If you wish, it can be used to create a memorial honoring whomever you choose, and it may be directed for specific purposes on campus.

A Gift With an Income That Never Changes

A charitable remainder annuity trust is a way to make a gift while receiving a fixed, regular income. Income from such a trust can be a reliable supplement to other income in retirement years. Through the use of such a plan, professional management of assets can also be achieved for you and/or surviving loved ones. The payments received each year must be at least 5% of the amount originally placed in the trust. You determine the exact amount when your trust is created.

For example: Marie, 72, decides to transfer $250,000 to a charitable remainder annuity trust. She funds the trust with stocks that cost $100,000 and are yielding just 1%, or $2,500, per year in income.

Marie provides that her trust will pay her 5% of $250,000, or $12,500 each year, regardless of the actual earnings of the trust. She is pleased to be able to greatly increase her income while making a significant gift to The University of Alabama.

Here are the results she achieves:

Annual income for the rest of her life (5% of $250,000) — $12,500
Capital gain tax when the trust is created — $0
Immediate income tax charitable deduction — $140,000

(Her deduction can be carried forward for as many as five years if amount is more than can be deducted in the year of her gift.)

Please use the Contact Planned Giving form or e-mail mailbox@advancement.ua.edu to request a personalized illustration with no obligation.

A Gift With a Fluctuating Income

Like the annuity trust, the charitable remainder unitrust provides for a gift while a donor retains income. But unlike the annuity trust, the income from a unitrust fluctuates with the value of the assets placed in the trust.

You determine the annual payout percentage when the gift is made. Each year this percentage (at least 5%) of the value of the trust assets is paid to you or others you name. When the value of the investments goes higher, more income is received. The income will be less if the value of the assets declines. Additions can be made to this trust, and a tax deduction is allowed for part of each amount contributed.

For those who have reached the limit that can be deducted for contributions to Individual Retirement Accounts (IRAs) and other retirement plans, the charitable remainder unitrust could play a welcome role in building additional income for retirement years.

For example: In the example above, if Marie had instead chosen the charitable remainder unitrust option with payments based on 5% of the value of the assets in the trust each year, the first year she would receive $12,500. Next year, if the assets are worth $275,000, her income rises to $13,750 (5% of $275,000). If the value of the assets is less next year, her income will be reduced by a corresponding percentage.

In this case, Marie is entitled to a deduction equal to over half of the amount with which she funds the trust. She also avoids capital gain tax at the time the trust is created. The charitable remainder unitrust can be an excellent way to provide for an income today with the possibility of future growth for those who believe that investment assets will grow in value in future years.

Please use the Contact Planned Giving form or e-mail mailbox@advancement.ua.edu to request a personalized illustration with no obligation.

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