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4 Reasons you should consider a retained life estate gift to Duke

Phil Buchanan, Assistant Vice President of Gift Planning, explains why now may be an optimal time

March 18, 2015 | by Phillip Buchanan

4 Reasons you should consider a retained life estate gift to Duke

For many of us, our personal residence is one of our most valuable assets.  But did you know there is a way to donate your home, whether a principal residence or second home, to Duke and still live there for the rest of your life?  Likewise, you may have inherited or purchased a farm, or timber, or hunting property, but none of your loved ones have any interest in the property after you are gone.  If any of these scenarios ring familiar, now may be the perfect time to consider a gift of a retained life estate to Duke.

A retained life estate gift allows a person to become a donor by irrevocably transferring ownership of a home or farm to a charity, such as Duke, while retaining lifetime use of the property.  This gift is restricted to homes and farms, but not other types of real estate.  An appraiser will determine the respective values of the life estate you keep and the charitable remainder that you are donating to Duke.

Here are four reasons why a retained life estate gift could be beneficial to you:

1) Immediate income tax deduction: You will receive a current income tax deduction and the real estate is removed from your taxable estate when you pass away so your family does not have to deal with selling the property.

2) Current interest rates are near historic lows: The extremely low interest rates mean your life interest in the property will have a relatively low value and the “remainder” left to Duke will have a high, tax deductible, value.

3) Right to use the property: You can continue to live in, rent, harvest, hunt, or otherwise enjoy the real estate, but with a valuable income tax deduction to use now!  During your lifetime, as the "life tenant," you will pay applicable taxes, insurance, and ordinary maintenance costs previously incurred as full owner of the property.  If you decide to sell the property, the net proceeds will be divided with Duke.

4) Make a larger gift than you thought possible: By transferring the ownership of your property to Duke, you will have the satisfaction of being able to make a meaningful gift to support the program or area at Duke you feel passionate about.

Alternatively, if you only want to use the property for a short time, you may want to consider an outright gift of the property to Duke and a leaseback (at fair market value) of the property for a few years.  This method shifts the burden of carrying costs for taxes, insurance, maintenance, and so forth to the charity.

Contact the gift planning office at Duke if you would like to explore how a gift of a retained life estate, or other real estate gift, may work for you.

About the author


Phillip Buchanan Senior Philanthropic Counsel for Duke University

Phil is a veteran of development and gift planning who considers it a privilege to help good people celebrate the joy of giving. He serves as Duke’s senior philanthropic counsel and helps donors, professional advisors and Duke Development officers evaluate the best options for making a charitable gift to Duke. He has been featured in publications such as BusinessWeek and Kiplinger’s. When he’s not at work, Phil attempts to solve the mysteries of the universe for his three inquisitive young sons.

Phillip Buchanan can be contacted via email or by phone at (919) 681-0467.

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