What Is A Retained Life Estate?

A retained life estate is a gift plan defined by federal tax law that allows you to donate your home or farm to the institution to benefit Salus University or one of its colleges, while retaining the right to live in it for the rest of your life.

As the creator of a retained life estate, you irrevocably deed to the institution your home or farm, but retain the right to live in it for the rest of your life, a term of years, or a combination of the two. You may also use a vacation home to create this kind of gift. 

While you retain the right to live on your property, you continue to be responsible for all routine expenses - maintenance fees, insurance, property taxes, repairs, etc. If you later decide to vacate your property, you may rent all or part of the property to someone else or sell the property in cooperation with the institution.

When your retained life estate ends, the institution can then use your property or the proceeds from the sale of your property for the purpose you designate.

Example: If you irrevocably transfer your home or farm, which has a total value of $50,000, to the institution and the right to live in it is retained for the lifetime benefit of an individual, age 72.

Your Benefits Include:

  • You will qualify for a federal income tax deduction of approximately $23,241. Your deduction may vary modestly depending on the timing of your gift. Note that deductions for this and other gifts of cash and non-appreciated property will be limited to 50% of your adjusted gross income. You may, if necessary, take unused deductions of this kind on tax returns over the next 5 years, subject to the same 50% limitation.
  • You will retain the right to live on your property for the rest of your life.
  • Your estate may enjoy reduced probate costs and estate taxes.
  • You will provide generous support to Salus University or one of its Colleges.

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