Planned Giving
Gifts of Real Estate
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, 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
advisor 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 having to recognize the taxable capital gain right away. The trust takes all 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.
Gifts
of real estate 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 advisor set up).
In any case, while we discuss some generalities here about
donating real estate, if you are considering such a gift to
Southern Coos Health Foundation , 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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