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August 2009

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Incorporating Naming Rights into Estate and Charitable Planning

Say that you know you would like to make a significant contribution to the future of the University of Wyoming but you also want to take care of your family. Here’s how one man, age 78, did just that.

The donor’s charitable and estate planning goals include making a significant named gift to the College of Business to create a permanent endowment that will advance the college’s education initiatives, improve student experiences, and enhance faculty retention and recruitment. At the same time, his family planning goals include providing long-term financial security to his children and grandchildren as tax-efficiently as possible. He was offered a significant naming rights opportunity by the University of Wyoming College of Business. The UW guidelines and the naming criteria developed by the College of Business require a gift of $1,000,000 to name a particular facility in the new state-of-the art College of Business building. (Gift amounts vary, depending on the naming opportunity.)

The donor worked with the UW Foundation and his own team of advisors to develop the following two-part plan. 

The First Part, a CRUT, Creates a Permanent Endowment

The donor created a Charitable Remainder Unitrust (CRUT) with the help of his attorney and funded it with $500,000 in securities. The CRUT will make payments to him of 5% (determined annually) of the value of the principal of the trust. The trust is structured as a term trust—for the shorter of his life or a term not to exceed
20 years—so that he knows he will have a stream of income for the balance of his life. Of course, he also receives a considerable charitable income tax deduction upon funding the trust that can be used to offset his income in the year of the gift and for five additional years. This donor says he takes comfort in knowing that UW will be able to put his gift to good use within 20 years. If this donor lives to his normal life expectancy of 88 years, the remainder gift will pass to UW in 10 years. If the trust assets earn an average of 7% over that 10-year period, the balance of the trust will be $609,497 when the trust terminates. This amount will be used to create a permanent endowment within the College of Business. Assuming a 4% payout policy, the UW College of Business will be able to support its students and programs with approximately $25,000 in annual earnings generated by the remainder interest.

The Second Part, a CLAT, Creates a “Temporary Endowment”

At the same time, the donor will transfer $500,000 to a Charitable Lead Annuity Trust (CLAT) with a 20-year term. The donor named his two children as the remainder beneficiaries of the CLAT. Thus, he has made a gift of $500,000 but he is also entitled to an offsetting charitable deduction of $378,910, resulting in a taxable gift of only $121,090. The CLAT trustee makes a 5% annuity payment ($25,000) to the UW Foundation each year of the
20-year term, for a total payout over the life of the trust of $500,000. At the end of the 20-year term, assuming the trust averages a 7% return, the donor’s children will receive $909,741.

By incorporating the CLAT into his plan, the donor has essentially made, in addition to his irrevocable CRUT commitment, a pledge of $500,000 payable over 20 years in exchange for the $1,000,000 naming opportunity. As a result of this “temporary endowment” gift structure, the UW Foundation has increased its endowment—and its ability to support UW’s students and programs—by over $500,000.

Naming Rights Opportunities on Campus

The University of Wyoming is in the midst of its greatest era, including fundraising success and the construction of capital projects. This is due to unprecedented private philanthropy, as well as unbelievable support from the State of Wyoming. With many projects completed and many more planned or in progress, there are many opportunities to make an impactful named gift.

Making a naming rights gift commitment is easy and can be accomplished through a number of planned giving structures or by simply making a pledge commitment (which can be paid over 5 years). It is also an incredible way for families to leave their mark at the University of Wyoming.

For more information on the many current naming rights opportunities, including the College of Business, Coe Library, and the College of Law, please contact me.

Tracy R. Richardson, Director of Planned Giving, 307-766-3934 or e-mail trichar6@uwyo.edu

Please consult your attorney or tax advisor before making any decision related to charitable and estate planning.

Have you taken some time to look around our planned giving website?
I would encourage you to spend some time viewing all the resources available
on the website by clicking on Gift Legacy below.