Family Gift Planning through Charitable Trusts
Paul and Nancy Burton graduated from Whitman in 1951 and 1953, respectively, and have been active supporters of the College. Paul currently volunteers on the Gift Planning Committee and Nancy has served on the Board of Overseers since 1990 and is retiring this year after a two year term as Chair of the Board. Two of their children, Bob and Jean, graduated from Whitman as well. Paul and Nancy wanted to make a gift to the College, but also were concerned about taking assets away from their family. After some consideration, a Charitable Remainder Unitrust was selected as the method to make a generous gift to the College while also supporting their family.
Paul and Nancy created a unitrust that will operate for a period of 15 years. The unitrust pays a fixed percentage of the value of the trust, as valued annually, to their four children in equal shares.
"When we first considered a unitrust, it seemed unwise to give away assets we wanted to leave to our children upon death. As we learned more about unitrusts, it became apparent we could accomplish our goal of transferring funds to our children and make a substantial gift to Whitman as well. The unitrust provides our children quarterly payments during the years they are raising their families. Because our children are self-sufficient, they can use the trust payments to enrich their families' lives or for unexpected expenses. Unlike inheritances, they don't have to wait until our deaths to receive these funds. Further, as death taxes would have reduced their inheritance by a substantial amount, they actually receive more and collect it sooner." Paul and Nancy Burton.
The Burtons used highly appreciated stock to fund the trust, and were able to avoid the capital gains tax liability that would have been due had they sold the stock themselves. Once the stocks were transferred to the trust, the trust sold the stocks tax free and reinvested the proceeds into a well diversified portfolio of stocks and bonds. Paul and Nancy also received a charitable income tax deduction as a result of the unitrust's charitable status.
Whitman College serves as the trustee for the Burtons, and is responsible for the administration and asset management of the unitrust. With long term investment expectations for the unitrust of a little more than 8 percent and the unitrust distributing a lower fixed percentage of the trust value, it is anticipated that the payments to the four children will increase over time to help keep pace with inflation.
"Being a beneficiary of the Whitman unitrust has been a powerful experience. The trust allows my parents to transfer a moderate sum of money each year which we can earmark for special projects. Our family has used this for life enriching family experiences which would be a struggle to afford otherwise. Experiences such as skiing with my extended family, premier soccer for our two younger sons, and music lessons for all three sons. In the future, these funds will be used to pay for part of our son's college expenses. We feel a responsibility to use the money wisely and in a way in keeping with our family's values of thrift, hard work, family ties, and developing the whole individual." Jean Burton Over '82.
Over 15 years, the trust is expected to distribute more income to the children than the amount of the assets originally placed in the unitrust. The children are benefiting by receiving an enhanced income and there is no concern about assets intended for the children being depleted by the estate tax. After the 15 year period, the unitrust will terminate and the assets remaining in the trust will pass to the college.
With thoughtful planning, the Burtons were able to accomplish both of their goals — support of their family and Whitman College.