About Retained Life Estates
A Retained Life Estate is a planned giving arrangement where individuals can donate their home or real property to a charitable organization while retaining the right to live in it for their lifetime.
It is ideal for homeowners who wish to make a significant charitable gift while still enjoying the property’s use and avoiding the complexities and costs associated with transferring ownership during their lifetime.
Benefits
- Potentially receive a tax deduction for the value of the charitable gift.
- Retain the right to live in the property.
- Make a significant charitable gift in support of our mission.
How it works
- Transfer ownership of the property to us, but retain the right to live in the property for the rest of your life.
- Continue responsibility for all maintenance, insurance, and property taxes on the property during your lifetime.
- If eligible, receive a tax deduction for the value of the charitable gift.
- When you pass away, we assume ownership of the property and can use it or sell it in support of our mission.
There may be some restrictions on the types of property we can accept, so please contact us before you donate.
Important Information About Retained Life Estates
Understanding Retained Life Estates:
A Retained Life Estate allows you to donate your home, farm, or vacation property to Hospice of the Northwest Foundation while retaining the right to live in or use the property for the rest of your life.
The arrangement can cover your lifetime, the lifetime of your spouse, or another person you designate.
Upon the end of the life estate term, the full ownership of the property transfers to our foundation without going through probate.
Only certain types of real estate qualify for this arrangement: your personal residence, vacation home, or farm.
Commercial properties and rental properties generally do not qualify for life estate arrangements.
Tax Benefits and Financial Considerations:
You may be eligible for an immediate income tax deduction for the present value of the remainder interest (the portion you’re giving to charity).
The deduction amount is based on factors including your age, the property’s value, and IRS interest rates at the time of the gift.
You continue to be responsible for all regular expenses while you live in the home, including maintenance, insurance, property taxes, and utilities.
Major capital improvements to the property may provide additional tax deductions.
The property is removed from your taxable estate, potentially reducing estate taxes.
Relationship with IRA Assets:
While you cannot directly fund a Retained Life Estate with IRA assets, there are strategic ways to coordinate these giving vehicles:
You can use Qualified Charitable Distributions (QCDs) from your IRA to cover ongoing expenses of maintaining the property while you live there.
You can name Hospice of the Northwest Foundation as the beneficiary of your IRA to complement your Retained Life Estate gift, potentially creating a more comprehensive estate plan.
In some cases, you might consider using IRA distributions to fund a Charitable Gift Annuity that provides income during your lifetime while you continue to live in your home under a Retained Life Estate arrangement.
These combined strategies can help maximize both charitable impact and tax benefits while ensuring your ongoing security.
Legal Requirements:
A properly drafted deed is required to create a Retained Life Estate.
The arrangement must be documented with a Life Estate Agreement that clearly outlines the responsibilities of all parties.
A qualified appraisal of the property is necessary to determine the value of your charitable tax deduction.
The property must be marketable and free of hazardous waste or significant environmental issues.
Donor Responsibilities:
As the life tenant, you remain responsible for maintaining the property in good condition.
You must continue to pay property taxes, insurance, and utilities.
Significant modifications to the property typically require approval from Hospice of the Northwest Foundation.
You cannot sell or mortgage the property without the foundation’s consent, as we hold the remainder interest.
Getting Started:
We recommend discussing this option with your family, attorney, and financial advisors before proceeding.
Hospice of the Northwest Foundation can provide general information but cannot offer legal or tax advice specific to your situation.
This information is provided for educational purposes only and is not intended as legal, tax, or financial advice. Please consult with qualified professional advisors regarding all financial, tax, and legal matters.
We’re here to help you meet your goals!
Our team would be happy to speak with you in confidence about your giving goals, with no obligation.
Name: Shelly Goss
Title :Stewardship and Annual Fund Manager
Phone: 360-814-5702
Email: mgoss@hospicenw.org
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