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Getting Started: The Retained Life Estate

One of your valued possessions, your home, can become a valued gift to Sisters Hospital Foundation—even while you are still living in it, and even if you want your spouse or other survivor to live there for life. This arrangement is called a retained life estate.

You Retain Rights, Responsibilities—and Tax Savings
By deeding your home to us now, you can obtain a sizable income tax deduction this year. The amount depends on the value of the property and your age (and the age of any other person given life use). In addition, you retain the right to rent your home or make improvements to it. You continue to have responsibility for maintenance, insurance and property taxes.

Example: Ellen, aged 65, a widow, deeds her home to The Foundation, though she plans to live there for the rest of her life. The market value of the property is $200,000 (the house, $160,000, and the land, $40,000). Using the required IRS table to discount the gift based on Ellen’s life expectancy and future depreciation of the house, her accountant determines her income tax deduction to be in excess of $91,000.¹

Any personal residence qualifies for this tax deduction—a farm (with or without the house), vacation home, condominium or even stock in a cooperative housing corporation.

Your gift to us must be an irrevocable remainder interest. In other words, after your life use and that of any survivor, we receive the property outright.

Tax Savings for Partial Use
Even a home you don’t occupy year-round may qualify. For example, you could give us a one-half interest in a vacation home. You would continue to use the property for six months of each year while we, as half owner, would use it for the remaining six months. As a result, you’d be entitled to an income tax charitable deduction based on half the property’s fair market value.

Life Income From Home Transferred to a Trust
If you don’t want to live in your unmortgaged home any longer, consider transferring it to a charitable remainder trust. The trustee can then sell the property and invest the proceeds in income-producing securities. You’ll receive an income for life—and so can a survivor you name. The trust principal becomes ours after your lifetimes, without exposure to estate taxes when spouses are the only income beneficiaries.

When you transfer appreciated property that has been held long term, you won’t pay any up-front tax on the capital gain. And you’ll benefit from a substantial current income tax deduction.

Calculate how a charitable remainder annuity trust can benefit you.

Calculate how a charitable remainder unitrust can benefit you.

Personal Satisfaction, Too
A gift of your home is a tangible and enduring testimonial of your interest in our goals. And your satisfaction in giving complements your important tax savings.

¹This example is based on a 3.4 percent charitable midterm federal rate.

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Please call Julie Snyder at 716-862-1992, or e-mail us at jsnyder@chsbuffalo.org, for more information.

The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.