Planned Giving: Foundation and Charitable Gift Planning - University of Wisconsin

3 Ways to Fund Your Charitable Trust

A charitable remainder trust can be funded with a variety of assets—it's up to you. While some assets are easier to give to your charitable trust, you'll want to consider other important issues such as asset availability and capital gains tax savings. Here's a rundown of three popular possibilities and their effects.

Cash. Writing a check is the least complicated way to fund the trust. The trustee can then invest the cash in a diversified portfolio of securities.
Stock. Stock that is currently worth more than you paid for it and that you've owned for more than one year is an ideal funding choice. This stock is an especially attractive choice if it now produces only a modest income. Contributing low-yield stock can immediately boost your cash flow by means of a higher payout from the trust. You escape up-front tax on the stock's capital gain and receive a substantial income tax charitable deduction. Plus, these assets are easily transferred to the trust.
Real estate. You can contribute any type of appreciated real estate you've owned for more than one year, provided it's unmortgaged, and realize benefits similar to those for a stock gift. The donated property may be a residence (a personal residence must be vacant upon contribution), undeveloped land, a farm or commercial property. Real estate works well with only certain variations of charitable remainder trusts (i.e., a flip unitrust). Your estate planning attorney who will draft your trust can give you more details.

Have your stocks or real estate lost value in recent years?
For tax purposes, they are still appreciated if their current value is more than what you originally paid for them.

We would be happy to work with you and your advisors to discuss a potential trust that meets your financial goals and also supports our mission. Just contact Al Trapp or Pat Stephens at 608-785-8496 or 608-785-8153 or atrapp@uwlax.edu.

The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.