Gift Plan Details: Retained Life Estates

Donors can irrevocably transfer title to real estate (a primary home, a vacation condo, etc.) to your organization while keeping the right to live in and/or use the property for the balance of their lives, or for a term of years.  Even though they haven't moved out, they receive an upfront charitable deduction based on the fair market value of the property, minus the present value of their future tenancy there.

A retained life estate allows donors to make a significant gift to you using what may be the most valuable asset they own, yet not disturb their living arrangements or cash flow.

The donors in a retained life estate transaction pay no rent for their use of the property.  However, they are responsible for the property's ongoing taxes, structural maintenance and upkeep.  You and the donors reach agreement about what you will both do if the donors no longer wish to keep using the property after it has been donated, or if they become unable to continue using it.  The terms of this agreement should be very clearly stated in writing before the transfer of the property takes place.

Your organization will perform standard due diligence before agreeing to accept the property.  Be especially vigilant if the property is located such a distance away that your personnel cannot easily keep it under routine observation; if the property is already in poor condition; or if the donors appear unlikely to be able to keep maintaining the property.

(Our handy Planned Giving Pocket Guide describes all planned gifts.)