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Retained Life Estate
You give your
house or farm to the College and retain the right to live in it. You receive a charitable
deduction, but usually no income.
Do you have a house or ranch or farm or vacation home that you love? You may continue to live in it and earn a charitable deduction by giving it to Pomona College. At the end of your life, the College receives clear title to the property. Or, if you decide to move, we will discuss with you selling the property. We will undertake the burden of the sale.
You establish a retained life estate by giving the College a deed to the property. The deed states that you retain the right to occupy the property for the rest of your lifetime. You receive a charitable deduction for having given the remainder interest to the College.
While you continue to live in the property, you continue to be responsible for maintenance, insurance, gardening and property taxes.
Here is An Example:
"We'd Like to Continue Living in Our Home."
Ms. Lewis, age 72, and Ms. Matthews, age 68, own a home that they intend to live in for many years. They want to take advantage of the equity in their home without having to borrow.
They give Pomona College a deed to the house, retaining a life estate that does not terminate until they both have died. Their home is currently worth $400,000, and they are both in the 30% federal income tax bracket.
The gift will entitle Ms. Lewis to an income tax charitable deduction of $92,700 and Ms. Matthews to an income tax charitable deduction of $80,200. This will provide Ms. Lewis with federal income tax savings of $27,800 and Ms. Matthews with federal income tax savings of $24,000, providing them with the additional income they need. The value of the house will be removed from their estates, which will reduce estate tax for both of them. These income and transfer tax benefits make sense for Ms. Lewis and Ms. Matthews, especially since they have no children or other heirs to whom they might wish to leave the home.
Please contact us for more information on your particular situation.
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