Frank (’39) and Evelyn Roll ’41 Rice had a problem—their business was too successful.
After a lifetime of building their forklift sales and service business, Rice Equipment Company, in St. Louis, Mo., Frank and Evelyn looked forward to retirement. Over the years, their company had diligently saved profits and accumulated a nice sum of retained earnings. While this may be an enviable problem to have, if Frank and Evelyn took those retained earnings they would have had a substantial tax bill to pay. They needed to develop an exit strategy.
The Rices wanted to unlock the value tied up in their business so they could retire, but they didn’t want a big chunk of the proceeds to go to Uncle Sam.
What should they do?
Frank (’39) and Evelyn Roll ’41 Rice wanted to retire and needed to take money from their business, but they didn’t want to pay a big tax bill.
The Rices also firmly believed in the power of Christian education to change lives and they faithfully supported Union College with their time and their money.
Their son, Geoff Rice ’78, says, “They always had a real soft spot for Union College.” It is where Frank and Evelyn met and were engaged, and after graduating, they remained connected to the College of the Golden Cords.
Frank and Evelyn consulted with Union College about their dilemma and discovered a unique and creative way to generate supplemental retirement income. They decided to create a charitable remainder unitrust, funded with shares of stock from their business. Union College, as trustee, then offered to sell the shares back to Rice Equipment Company. The company purchased the stock from the trust using the retained earnings, thereby avoiding a big tax bill to Frank and Evelyn.
The cash in the unitrust was then invested for the long term and the Rices began receiving a quarterly distribution for the remainder of their lives. Every year the trust is revalued and a new quarterly distribution is calculated.
After creating the trust, Frank and Evelyn established a scholarship at Union to assist students who demonstrate a financial need. Geoff explains, “They felt that helping someone get an education was the best way to make an impact on a young person’s life.”
After Frank and Evelyn both passed away the balance remaining in their trust was added to their scholarship. “There have already been quite a number of students who have been helped by this scholarship,” Geoff reports. “When the trust matures, even more students will receive the financial help they need to get a Christian education each year.”
A charitable remainder unitrust converted the Rices’ highly appreciated, low-yielding securities into consistent and increased income. Additional benefits include:
• A sizable income tax charitable deduction
• Deferral of capital gains tax
• Professional management of the trust assets
• Assets given to a charitable remainder unitrust will not be included in the donor’s estate for computing estate tax.
Frank and Evelyn found a charitable remainder unitrust is an excellent method for devising a supplemental retirement plan. If you want to find out more about how a charitable remainder trust can help you in retirement, contact Scot Coppock at 402.486.2503 or email firstname.lastname@example.org. He is excited to help you explore meaningful ways to fund your retirement.