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Home > Planned Giving > More About Retained Life Estates

More About Retained Life Estates

Would you like to make a major gift to Sisters Hospital Foundation but feel that you don't have the assets available to make such a gift? Many donors find that their largest asset is their home, but they don't consider using this asset to make a gift, oftentimes because they cannot imagine leaving their home.

These donors should explore the concept known as a retained life estate, which enables donors to make a gift of their home to Sisters Hospital Foundation but remain living in the home for the rest of their lives.

How It Works
The donor makes a gift of a personal residence or farm to The Foundation and retains the right to occupy it for life. The property does not have to be the donor's primary residence, but it must be a personal residence and not a rental property. The donor must still pay real estate taxes, maintenance fees and insurance on the property.

Tax Benefits
Making a gift of a retained life estate provides you with a number of tax benefits. You take a charitable income tax deduction in the year the gift is made; the amount of the tax deduction is based on your age and the value of the property. You can use the deduction up to 30 percent of your adjusted gross income.

Also, the transfer is not subject to capital gains tax. Plus, the property passes free of federal estate tax as long as the life estate was created for the donor and/or the donor's spouse and the remainder is left to Sisters Hospital Foundation.

Flexibility
If at some point the donor no longer wishes to occupy the property, it can be rented to provide the donor with an income. Or, the donor can choose to relinquish the remainder of the life estate, giving The Foundation the right to use the property for the remaining years. This will provide the donor with a new charitable income tax deduction based on the value of the donor's life estate at the time it is relinquished.

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

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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.