Estate planning tool benefits farmers, ranchers and OSU
In the late ’90s, Dr. Dennis and Marta White took early retirement from Elanco Animal Health and Eli Lilly & Co., respectively, and moved from Indianapolis to Ninnekah, Oklahoma — Dennis’ hometown.
Dennis and his brother, Jerry White, expanded their ongoing partnership in stocker cattle. After acquiring more land, Blackberry Ranch Inc. was formed.
At its height, Blackberry Ranch ran between 2,000 and 3,000 stocker calves annually in Grady County and with a few co-operators in Oklahoma and Wyoming.
They also fed yearlings in Oklahoma, the Texas Panhandle and southwest Kansas.
Over the years, the family acquired even more land and adapted operations at times to take advantage of marketing opportunities, including adding Mexican steers and Angus heifers.
“I worked around cattle most of my life, and to do this in retirement has been a blessing,” said Dennis, a 1964 (bachelor’s) and 1969 (master’s) animal science graduate.
But as much as Dennis loved running the ranch, a double-knee replacement in 2014 made the Whites reassess the work the profitable business required.
The couple divided the ranch’s assets with Dennis’ brother, leaving the couple with 429 acres as part of D&M Cattle Inc.
After a couple of turns of stocker cattle and time to get the property in better condition to sell, Dennis and Marta began researching how to efficiently dispose of the property and continue their retirement in Stillwater.
After many conversations with attorneys, financial planners and the gift planning staff at the OSU Foundation, the couple found that a flip charitable remainder unitrust would provide the flexibility and freedom they were seeking.
The gift plan provided the Whites a secured source of lifetime income (in their case, 5 percent of the trust value), allowed them to benefit the university and provided them tax benefits, including a sizeable tax deduction and avoiding capital gains tax.
The gift plan is referred to as a FLIP CRUT. It involves a donor irrevocably transferring real estate like a ranch or farm to the charitable trust, with the OSU Foundation as the eventual trustee.
The process included obtaining a qualified appraisal on the property (an IRS requirement), paid for by the donor, as well as securing an initial Phase I environmental assessment (requested and paid for by the OSU Foundation).
The Whites also hired an attorney to prepare the trust document, and engaged an auction firm at their expense to market and sell their ranch.
After the sale and subsequent closing of the property, the OSU Foundation assumed its role as the successor trustee of the FLIP CRUT. In this role, the OSU Foundation administers the trust, prepares related tax statements and distributes regular income to the Whites.
"We believe that any OSU alumni or friends of OSU who are considering selling their property but still need or want cash flow should consider a gift like this."
“Additional benefits we saw were the ability to share some of our hard-earned wealth with our family and to see them enjoy it during our lifetime. We also get to participate at a higher level in more OSU projects, including the President’s Fellows, Friends of the OSU Library, Dr. Robert Totusek Lecture Series and Women for OSU.”
The gift plan can be a great tool for farmers and ranchers who do not have heirs or whose heirs may not be interested in maintaining the property or operations, said David Mays, senior associate vice president of philanthropy at the OSU Foundation.
“Selling such property outright would oftentimes result in significant capital gains tax liability that is avoided via a gift using the FLIP CRUT,” he said. “The FLIP CRUT allows donors to make a gift of that property, get income for themselves, benefit their passion areas at OSU and get a sizeable tax deduction at the same time.”
The Whites are pleased their gift will benefit the Division of Agricultural Sciences and Natural Resources after their passing through a named endowed chair, fellowship fund and research facilities support for animal science.
“I think most people who utilize these plans are looking forward to the day it turns over to the Foundation and benefits the university. We know the impact the gift will make before we’re gone,” Dennis said. “Like most people who go to college, you increase your value to society and to your family. I think it’s important we give that chance to other young people through either scholarships or investing in endowed chairs.”
For now, Dennis and Marta White are enjoying their slower-paced retirement in Stillwater. They volunteer their time, mentor students, serve on various committees, support numerous causes and attend as many basketball and football games as they can.
“We love getting involved with the students,” Marta said.
To learn more about charitable remainder unitrusts and other estate planning vehicles, call the Office of Gift Planning at 800-622-4678 or firstname.lastname@example.org.
FLIP CRUT Tips from Dennis and Marta White
- Have an initial plan going into the process and allow time to get things done. In the Whites’ case, they planned their property’s sale early in the year to accommodate when ranchers plan grazing strategies and herd expansions.
- Understand that there are some up-front costs with establishing a FLIP CRUT. The list of responsibilities for donors may include paying for an appraisal, attorney cost to draft the trust and realtor/auction fees.
- Stay in close contact with OSU Foundation staff as well as the realtor/auction firm. Every FLIP CRUT transfer is different, and the OSU Foundation has gift planning experts to help along the way.
- Designate your gift to Oklahoma State University in a way that is meaningful to you. The Whites chose to benefit the Division of Agricultural Sciences and Natural Resources, where Dennis White received his bachelor’s and master’s degrees in the 1960s.