- FIELD NEWS
- TOOLS AND RESOURCES
- CHARITABLE SOLUTIONS
- LCF at a Glance
- Charitable Fact Finder
- Donor Advised Dynamic Funds
- Charitable Gift Annuities
- Charitable Remainder Unitrust
- Charitable Remainder Annuity Trust
- Gift of Real Estate into Charitable Remainder Trust
- Gift of Real Estate using Life Estate Reserved
- Charitable Life Insurance
- Organizational Endowments
- Bequests
- Beneficiary Proceeds
- Leveraging Annuities with Life Insurance
- Wealth Replacement Insurance
- Scholarship Funds
- Testamentary Charitable Remainder Trust
What is Life Estate Reserved?
Donors sign a Life Estate Agreement and a deed, which transfers immediate ownership of the real estate to the LCF; however, the deed states that the donor retains the right to use the property for their lifetime(s). At the end of the donor’s life, the LCF takes immediate possession of the property, and it does not go through probate. The property is sold and the net proceeds are allocated to the donors’ choice of charitable funds at the LCF.
The gift minimum is $100,000.
Target Audience
- Clients interested in making a gift of real estate, but who want to continue to use or rent out the property during their lifetime.
- Clients who wish to give real estate, and bypass associated gains when it is sold.
- Clients who wish to remove the property from their estate now and avoid probate.
Tax and Financial Benefits for your clients
- The client receives a charitable income tax deduction in the year of the gift equal to a portion of the appraised fair market value.
- For gifts of long-term appreciated real estate, the annual deduction limit is 30% of the donor’s AGI.
- Unused charitable deductions may be carried over an additional 5 years.
- Donor can use or rent out the property until their death, at which time the LCF takes possession of the property.
- The property given is not subject to probate.
- The LCF sells appreciated assets tax-free.
Benefits to you, the Professional Advisor
LCF will support you with a full range of charitable products and services, and you'll be compensated for your efforts by Thrivent or American Funds. (details)
More about Gifts of Real Estate with Life Estate Reserved
After the LCF takes possession of the property, it is sold and the net proceeds are allocated to the donor’s charitable fund at the LCF. If the donor decides during his/her lifetime that he/she does not need to use the property any longer, there are 2 options:1) LCF arranges for a joint sale of the property. The donor would receive a portion of the proceeds equal to the value of their remaining life estate interest.
2) The donor can deed his/her remaining life estate interest to LCF and receive an additional income tax deduction for that gift.
How to Make a Gift of Real Estate with Life Estate Reserved
- Request a personalized illustration for your client by calling 800-365-4172. To create a customized illustration for you and your client, we need the following information:
- Client's name, birthdate and tax bracket.
- Proposed gift amount including cost basis. Please distinguish between value of land and value of buildings and other improvements.
- The LCF sends you an illustration packet to review with your client.
- If your client wishes to proceed and establish a gift of real estate, complete and return the Fund Workbook, Real Estate Worksheet and Environmental Questionnaire included in the illustration packet.
- Review your compensation options from Thrivent or American Funds.