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Planned Giving
Retained Life Estate
Retained Life Estate
Retained Life Estate Story:
Sally, age 75, is an SJS graduate and a widow of an SJS graduate, who has fond memories of St. John's. She would like to make a significant gift to SJS, but needs her investments to support her retirement. Her home, long since paid off, is now worth $500,000. Since Sally has no children, she has long thought about leaving it to St. John’s at her death. Her accountant suggested she might accomplish her long-term purpose and gain some significant current tax benefits by giving it to SJS now and retaining the right to live in it for the remainder of her life. By doing so, she is able to generate a new income tax deduction of over $300,000, thus saving considerable income tax over a period of several years, all without any changes in the way she lives. Additionally, she knows that at her death she will leave St. John’s with an asset worth at least $500,000, perhaps more.
Retained Life Estate – How it works
A donor can donate a piece of residential real estate (a home or vacation property) and retain the right to use the property for life. This works well when a donor would like to continue living in the home for the rest of his or her life, has no one else to whom he or she would like to leave the property, will not need the money from the sale of the property to buy into a retirement community, and would like to make a significant long-term contribution. Usually, the donor maintains the responsibility for the taxes, insurance, and upkeep of the property, but receives an upfront tax deduction for the gift.
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