Solving for Complex Assets

When cataloging the many strengths of Texas A&M University, Aggies might include the Corps of Cadets, the 12th Man and the university’s core values. Donors Peggy and Jim Sims would add another item to that list: the exceptional real estate expertise of the Texas A&M Foundation.

The Sims, both retired anesthesiologists who’ve been married 48 years, were like many other Texans in that a considerable amount of their net worth was in real estate. “We had constructed our financial lives in such a fashion that we had assets but little continuing income,” Jim said.

Over the past four decades, he and a business partner had acquired 475 acres outside San Antonio, ultimately selling two large portions to residential subdividers. When Jim suffered significant health issues a few years ago, he started looking for a way to donate his partnership interest in the LLC holding the remaining 19.1 acres while also generating income.
 

Jim, a University of Texas graduate, and Peggy, a University of Arizona graduate, offered the donation to their alma maters but were turned down due to the transaction’s complexities. They were eventually referred to the Foundation by their neighbors, Kay and the late Charles “Charlie” Pence ’51, who had completed their own after-lifetime commitment of their Comfort, Texas, family ranch.

“We worked with Jim and Peggy to establish a charitable remainder trust, a solution that allowed them to solve multiple challenges while achieving multiple goals,” said Tim Walton ’90, the Foundation’s assistant vice president of real estate services. If the property had been sold by the partnership outright and the proceeds donated to the university, the Simses would have owed significant capital gains taxes. Instead, they donated their LLC partnership interest to their trust and appointed the Foundation as trustee, which earned them an immediate charitable income tax deduction.
 

As trustee, the Foundation managed marketing the property, assessing its value and selling it tax-free, keeping the Sims’ share of the proceeds in the trust. There were numerous steps along the year-and-a-half process—peppered with appraisals, legal consultations and IRS regulations—but Walton guided the Sims seamlessly through it all. “I needed the Aggie Network and Tim’s particular expertise to get the job done,” Jim said. “It has been such a positive experience. When the sale was completed, I felt like someone lifted 1,000 pounds off my shoulders.”

Their trust proceeds are now invested to generate consistent annual payments for both Jim and Peggy for their lifetimes. Afterward, the balance will fund Endowed Opportunity Awards. These scholarships typically benefit high-achiev­ing students from middle-income families who may not qualify for financial need-based support, which is a cause that resonates with the Sims. 

There’s much the couple admires about Texas A&M and its graduates. They have family and friends who are Aggies, and they served side-by-side with several Aggie physicians on 25 years of medical mission trips to Mexico and Honduras. “The university’s core values, especially selfless service, are very much aligned with our own. Our Aggie colleagues have always proved themselves to be ‘good Ags,’” Peggy said.

They hope their scholarships will support academically qualified applicants who couldn’t afford a college education otherwise. “We want to help make Texas a better place,” Jim concluded, “and we think this donation can help toward that goal.”

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