A retained life estate is a gift plan defined by federal tax law that allows you to donate your home or farm to The HSUS while retaining the right to live in it for the rest of your life.
As the creator of a retained life estate, you irrevocably deed to The HSUS your home or farm, but retain the right to live in it for the rest of your life, a term of years, or a combination of the two. You may also use a vacation home to create this kind of gift.
While you retain the right to live on your property, you continue to be responsible for all routine expenses - maintenance fees, insurance, property taxes, repairs, etc. If you later decide to vacate your property, you may rent all or part of the property to someone else or sell the property in cooperation with The HSUS.
When your retained life estate ends, The HSUS can then use your property or the proceeds from the sale of your property for the purpose you designate.
Subject to HSUS approval, retained life estate gifts are possible for people of any age but are most appropriate for people who are age 65 or older.
The gift planning staff in the Office of Major and Planned Gifts is available to discuss your options with complete confidentiality and without obligation. Contact a development officer today or call us toll free at 1-800-808-7858 or e-mail us at gifts@hsus.org.
EXAMPLE (as of February 2007):
Louise, age 70, irrevocably transfers her home, which has a total value of $500,000, to The HSUS and the right to live in it is retained for the lifetime benefit of an individual, age 70. She initially paid $250,000 for her home a number of years ago.
Assumptions
Life Tenant Age: 70
Value of Property: $500,000
Cost Basis of Property: $250,000
Value of Depreciable Portion: $333,333
Estimated Useful Life of Property: 45 years
Salvage Value of Property: $83,333
Louise's Charitable Deduction: $224,460
Benefits
1) Louise will qualify for a federal income tax deduction of approximately $224,460. Her deduction may vary modestly depending on the timing of her gift. Note that deductions for this and other gifts of long-term appreciated property will be limited to 30 percent of Louise's adjusted gross income. She may, if necessary, take unused deductions of this kind over the next five years, subject to the same 30 percent limitation.
2) She will retain the right to live on her property for the rest of her life.
3) Louise's estate may enjoy reduced probate costs and estate taxes.
Most material courtesy of PG Calc.
