Retained Life Estate Gifts
If you would like to make a significant gift to the University of Virginia and claim an income tax deduction, but want to continue using your cash and investment assets throughout your life, a retained life estate gift of real estate (such as your residence, farm, or vacation home) might work for you. To make this type of gift, you would donate only the remainder interest in your home and retain the right to live in and maintain the home for the rest of your life or for a preset term. At the end of the term, the property will be used to support the Darden School of Business.
Benefits of Making a Retained Life Estate Gift
- An income tax charitable deduction, based on your age and value of the property, in the year of your gift;
- Continued use and enjoyment of your property; and
- The satisfaction of providing significant support to Darden.
Additionally, removing the property from your estate may reduce taxes and probate costs.
How to Make a Retained Life Estate Gift
Retained life estate gifts are coordinated through the Office of Gift Planning and the UVA Foundation, which manages all gifts of real estate to benefit the University. Steps include:
- Completing the UVA Foundation’s Real Estate Checklist. The UVA Foundation will review the property’s condition and location and determine whether it can accept the property.
- Obtaining a qualified appraisal that includes a present value calculation.
- Executing a life estate agreement. This detailed agreement outlines your rights and responsibilities, such as maintaining the property, paying property taxes in a timely manner, and keeping the property insured.
- Executing a deed transferring the remainder interest in the property to the UVA Foundation for the benefit of the Darden School of Business.
EXAMPLE
Elizabeth and Gary want to make a significant gift to fund scholarships at Darden but want to continue living in their home and retain their cash and investment assets throughout their retirement. They have owned their home for 35 years, are in good health, and plan to live there in perpetuity. Their grown children have homes of their own and no desire to inherit their parents’ home, which has no mortgage and has increased in value since the time of purchase.
By donating their home while retaining the right to live there, Elizabeth and Gary will have the satisfaction of knowing that they are providing scholarship support to future Darden students and the peace of mind of knowing that they can continue living in their home for the rest of their lives.
Because they itemize their deductions at tax time, Elizabeth and Gary will be able to claim an income tax deduction based on the value of the gift.
The Cornerstone Society recognizes those who are honoring the University’s future through planned gifts, including bequests, beneficiary designations, charitable gift annuities, and charitable trusts.
The University of Virginia Darden School Foundation does not provide legal or tax advice. We recommend that you seek your own legal and tax advice in connection with gift and planning matters. To ensure compliance with specific IRS requirements, we disclose to you that this communication (including any attachments) is not intended or written to be used and cannot be used for the purpose of avoiding tax-related penalties.