Retained Life Estate
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Planned giving |
A retained life estate allows you to donate your personal residence (such as a home, vacation property, or farm) to HMC, while retaining the right to live in and use the property. When you make the gift, you retain the right to use the property for the rest of your life, a term of years, or a combination of the two. In exchange for your remainder interest gift, you receive an immediate income tax deduction.
This creative gift plan transfers your house to HMC but reserves a free lifetime tenancy to you. You can make a significant gift to HMC with the most valuable asset you hold, yet not disturb your living arrangements or your cash flow.
How it works:
- You transfer your residence or vacation home to HMC subject to a life estate.
- You continue to live in the property for life or a specified term of years, while continuing to be responsible for all taxes and maintenance costs.
- The property passes to HMC when your life estate ends.
Benefits:
- You receive an immediate income tax deduction for a portion of the appraised value of your property.
- You can terminate your life estate at any time, transfer the property to HMC and take an additional income tax deduction.
- You can have the satisfaction of making a significant gift now that benefits HMC later.
Planning points:
- Because of the variable nature of the real estate market, you will want to work closely a member of our staff to ensure that your philanthropic goals can be fully met.
- HMC must review and approve in advance all gifts of real estate. Working with our staff will allow you to maximize the benefit and impact of you gift while also, among other issues, providing us with information to assess the property's marketability and environmental status.
- HMC asks that all donors secure an independent appraisal to establish the property's value for the charitable deduction.
- Transferring property that carries a mortgage or other debt can result in income tax liability. We can discuss this with you and your advisors as you are considering your gift.
A retained life estate is a gift plan that allows you to donate a personal residence (including a vacation home) to HMC while retaining the right to live there for a particular period of time. You thereby receive a large income tax deduction and simplify the administration of your estate upon death.
As the creator of a retained life estate, you would irrevocably deed to HMC the residence, but in the deed you would specify that you can use the property for the rest of your life, a term of years, or a combination of the two. 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 it to someone else or sell the property in cooperation with HMC. You can even donate to HMC the rest of your lifetime right to live on the property, thereby qualifying for an additional income tax deduction.
It is also possible to create a retained life estate for someone else; a spouse or a sibling, for example. You can do this during your lifetime or upon death through your will. In addition, a retained life estate gift can be paired with another gift arrangement, such as a charitable gift annuity. Regardless of how you decide to proceed, when the retained life estate ends, we can then use your property or the proceeds from the sale of your property for the purpose you designate.
Although subject to approval by HMC, a retained life estate donation represents a generous lifetime gift that can be appropriate for people in various circumstances. It is generally most appealing to those aged 65 or older who know they would eventually like the property in question to benefit HMC.
Learn more about ways to give real estate.
