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Eileen and her husband, Paul, enjoyed
their house. They had raised their
three children there and had many
family memories. But after Paul passed
away suddenly, Eileen began to find
that the old house was a burden. Without
Paul to take care of things and with
their children involved in their own
families miles away, it seemed that
the house was too big, too old and
even a bit lonely.
 Eileen:
"Paul always said that I was
the solid one. If there was a decision
to be made, I could get to the bottom
line pretty quickly. Well, the bottom
line was that I needed to make a change
for a number of reasons. I decided
to move into a smaller place in town,
easier to take care of and one that
was part of a neighborhood where I
could make some new friends and be
a part of activities and things. And
where my grandchildren could still
come and visit.
"Paul and I had talked about what
to do when we got to this stage in
our lives. I just thought Paul would
be here with me, but that wasn't to
be. We had planned and knew I would
have enough money to live comfortably.
Initially we thought I'd need the
money from the sale of the house,
but I really don't.
"My adviser went over the numbers
with me. If we sold it, there would
be a large capital gain and taxes
to pay. But by putting the house in
a trust that then sells it, I avoided
a taxable capital gain, because when
I'm gone the trust goes to charity.
The trust takes the money from the
sale of the house and invests it,
and I get the income from the trust
for life. Then, an organization that
is doing great things will receive
the remainder of the trust and that
will even save some estate taxes."
 Depending
on the circumstances that are involved,
gifts of real estate can be an effective
means of planning a gift. Much of
the individual wealth in America is
invested in real estate. While the
first thought often is a home or farm,
real estate also can involve a vacation
or second home, an apartment or commercial
building, a shopping center, or undeveloped
land.
Often our real estate holdings, be it our house, a second home or investment property, are a significant part of
our net worth. Gifts of real estate,
therefore, can enable us to make significant
contributions. Each piece of property
and its unique circumstances need
to be reviewed to determine the suitability
of the property as a gift. Generally
speaking, a rule of thumb is that
an acceptable piece of property is
one that can be readily sold.
Also, there are many ways to donate
property. It can be an outright gift,
a retained
life estate, or placed
in a trust (such as what Eileen
and her adviser set up). In any case,
while we discuss some generalities
here about donating real estate, if
you are considering such a gift to
FirstHealth, please contact
us to discuss its suitability.
In addition to making a significant
contribution, there can be other benefits
for you:
- There may be a charitable income
tax deduction that would lower your
income tax.
- If your property has appreciated
in value since you acquired it,
there might be a large capital gain
tax that would result if you sold
it. By donating the property, you
may be able to avoid realizing the
capital gains.
- Depending on your state regulations,
you may be able to turn the property
into a gift that is structured to
provide income for you and a beneficiary.
- If the property is your home
or farm, you may be able to make
a gift of it now and continue to
live in it for the rest of your
life and receive tax benefits the
year of the gift.
- If the contribution from your
property exceeds the allowable charitable
deduction limits, the deduction
may be carried forward for five
years.
There can be significant advantages
to using property as a charitable
gift. Please contact
us to discuss your unique circumstances.
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