Are you landlocked?

 

You may not be landlocked in the traditional sense, but perhaps your charitable potential is locked up in land or other real estate. The WSU Foundation accepts gifts of farm or ranch land, personal residences and vacation homes. By gifting one of these types of property, you may realize tax benefits and support the WSU programs of your choice.

For many of us, real estate can represent one of the largest assets we own. Real estate also gives us a number of charitable giving options.

In spring 2011, Justus Fugate ’60, ’62 and members of his family gifted 160 acres of farm and ranch land to the WSU Foundation for the benefit of student scholarships in music and mathematics.

“It was a convenient way for multiple family owners (all with a minority interest) of a small farm to honor our parents,” said Fugate.

Direct transfer of ownership
As an outright gift or bequest, real estate can be transferred directly to the WSU Foundation. In most cases, the property will then be sold with the assets directed toward support of the WSU program of your choice. In addition to the satisfaction of assisting WSU, you may realize an income tax deduction and avoid capital gains tax incurred if the appreciated property had been sold outright.

Retained life estate
With a retained life estate, you gift a personal residence to the WSU Foundation and retain the right to occupy the property for life. You keep the use of the property and realize a charitable income tax deduction for the value of the remainder interest. After the retained life estate, the value of the real estate benefits your designated program.

Using real estate to fund life income gifts
Real estate also may be used to fund charitable remainder trusts and charitable gift annuities, which
pay you income for life. In this way, you are using
your non-income producing property to create an
income stream for you and a charitable gift to benefit
WSU.

With a charitable remainder unitrust, the life income beneficiary receives a predetermined percentage of at least 5 percent of the trust assets as revalued annually. You gift your property to the trust. The trust then sells the property to fund the life income payments with the remainder directed to the WSU Foundation to benefit the university program of your choice.

With a charitable gift annuity, the property would be received by the WSU Foundation and then sold, with the assets funding an annuity that would make payments to you for life. Annuity rates are recommended by the American Council on Gift Annuities and vary based on the age of the annuitant. For example, the payout rate for a deferred payment gift annuity for a donor age 65 with payouts deferred to age 70 would be 7 percent.

With both the charitable remainder trust and the charitable gift annuity, you may receive a charitable tax deduction and avoid capital gains tax on the appreciated value of the property. As most pieces of real estate are not income producing, the property must be sold to fund payments to the income beneficiaries. Net income unitrusts and deferred gift annuities provide time for sale of the property in order to make payments to the life income beneficiaries.

Gifts of real estate must be approved by the Real Estate Committee of the WSU Foundation. Real estate gifts typically require a Phase 1 Environmental Study and an independent appraisal provided by the donor.

Have you considered using your lake home to fund a student scholarship? Would you like to use your farm land to support a faculty position? For more information on unlocking your real estate assets to support WSU, contact Patsy Selby, WSU Foundation vice president for finance and administrative services, at (316) 978-3810 or patsy.selby@wichita.edu.

© 2014 Wichita State University Foundation

Wichita State University Foundation is a non-profit 501(c)(3) organization and donations are tax-deductible to the full extent allowed by law.