Establish your gift now and continue to enjoy your assets
About charitable trusts
If you’re considering making a gift to the university in the future, but you would like to receive tax benefits now, a charitable trust may be an appropriate vehicle for you.
A charitable trust is considered an irrevocable gift and as such is eligible for an immediate tax receipt based on the market value of the property, and any applicable discount rates based on your life expectancy. Further, any assets you place into a trust are not included in the value of your estate and therefore not subject to probate — the process of establishing the validity of a will.
Depending on your specific circumstances and wishes, you could consider one of two charitable trusts arrangements:
- A charitable remainder trust can be an inter vivos trust — a transfer made during a person’s lifetime — or a testamentary trust created within a will. In either case, the donor uses cash, securities or real estate to create a charitable remainder trust with a trust company or an individual acting as trustee. The donor or the donor’s designate retains the income interest in the property for life; the remainder interest is donated and held in trust for the University of Calgary.
- With a Charitable Residual Interest Trust, you can donate property such as real estate, art or jewellery to the university while still enjoying possession of the asset.
In either arrangement, you will pay tax only on the income attributable to the interest. Please note that charitable remainder trusts typically work better for larger gifts ($500,000 and up) because there is a cost to set up and manage the trust. UCalgary will work with the donor and the professionals to set up and manage the trust. All costs associated with this would be the responsibility of the donor.
As you consider a charitable trust to the University of Calgary, we can work with you and your advisors to identify and document a specific trust arrangement that works for you. Please contact us for more information or to arrange an appointment at your convenience.
Example: Charitable trusts
Raj wants to live in his house for the rest of his days, but he wants to donate the home — his principal residence — to the University of Calgary. By setting up this residual charitable trust, Raj will reduce his income taxes, continue enjoying his lifestyle and be able to stay in the house. The charitable trust lets Raj make a gift now and have no capital gains tax on the donation, as it is his principal residence.
Your art collection
Mary wants to donate her collection of art to the University of Calgary, but she wants the art to remain in her home so she can still enjoy it. So, she will transfer her artwork into a charitable trust now, give the University of Calgary a residual interest, and continue to be surrounded by her favourite paintings.
Your stocks and property
Philip wants to transfer stocks and some other capital property into a lifetime trust for him and his family, but names the University of Calgary as the remainder beneficiary. This helps Philip because his assets are professionally managed and he’s paid a fixed income from the assets, helping him save taxes and increase cash flow.
Once Philip sets up the trust, there is no encroachment allowed on the trust’s principle. It is an irrevocable transfer of assets, meaning the income and remainder.