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Gifts of Retained Life Estates

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Glossary

Definition
A retained life estate contract enables a donor to give a remainder interest in a personal residence or farm to Clarkson and reserve the right to remain in the property for life.


Further Information
A gift of the remainder interest in a property requires a contract, a Life Estate Agreement, between the donor(s) and Clarkson. This agreement outlines the rights and responsibilities of each party for such things as insurance, taxes, maintenance and major repairs. Generally, in addition to the right to remain in the property, the donor also retains the responsibility to maintain and protect the property. The right to ultimately sell (or use) the property, the “remainder interest,” passes to Clarkson.

A donor may create a retained life estate with a personal residence, vacation home, farm or possibly shares in a cooperative housing development. A Retained Life Estate Agreement is an irrevocable gift.

The appraised value of your property may count in the Evolution to Excellence fundraising campaign, and towards your next anniversary reunion. Contact the Annie Clarkson Society for help related to your unique circumstances.

Before discussing a life estate agreement, a donor should consider several points:

  • Ultimately, Clarkson should be able to use or easily sell my property.
  • Ideally, there should be no easements on my property.
  • I should have clear title to my property.
  • There should be no environmental hazards on my property.
  • I should have in mind a realistic value of my property.
  • I will need to pay for an appraisal for my income tax charitable deduction.


Tax and Financial Implications
Because a life estate agreement is irrevocable, the donor(s) may be eligible to receive an income tax charitable deduction. The calculation for the income tax deduction takes into account the value of the land and the value of the building separately. The land is considered to be non-depreciable. The value of the structure, its useful life and its salvage value, along with the number and ages of the beneficiaries are combined to determine the amount of the charitable deduction.

It is the donor's responsibility to acquire a "qualified, independent appraisal" as proof to the IRS of the value of the property.


Read about others who have planned gifts to Clarkson at We Ensure the Experience.

Process to Create
While every gift situation is unique, there are several steps that may be outlined to help clarify the process.

  1. You decide. Our philanthropy is a lifelong process. At some point in your life you may wish to express your thanks to Clarkson and help ensure the Clarkson experience, and decide that a life estate agreement is a way to do that.
  2. We talk. You will want to speak with the Annie Clarkson Society to make sure that your wishes can be accomplished at Clarkson, and to create the life estate agreement and any necessary documentation so that those who come after us can fulfill your intentions.
  3. You talk. You may meet with your financial and legal advisors to evaluate the option, and you may wish to contact an independent appraiser to review the property.
  4. You sign. You make a final review and sign the appropriate legal documents with your counsel and the gift planning office, creating your agreement.
  5. You relax. You have just connected yourself with the past and the future as you continue the good work of those who came before you, and you prepare the way for those who will come after you. Enjoy the moment!

What to Expect After Your Plan is Created
The creation of your plan is the start of a new relationship with Clarkson:
  • If you are a new member of the Annie Clarkson Society, you will receive letters of welcome.
  • As a member of the Annie Clarkson Society you will receive the Society newsletters and annual report each year.

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This web page does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your legal and financial advisors and Clarkson University before making or planning your gift. (rev 11/2014)