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Retained Life Estate

 

A Retained Life Estate is a gift arrangement whereby you give legal ownership of your residence or farm to a charity, but retain a life estate - that is you retain the right to live in or enjoy the gifted property for the remainder of your or someone else's life. The charity receives the property without restriction at the death of the holder of the life estate.

How does it work?
Ann Maxwell, a widowed Millsaps alumnus has decided to give her home to Millsaps, but reserves the right to live in the home for as long as she lives. Her attorney prepares a "Life Estate" agreement deeding the home to Millsaps which agrees to pay the ongoing property taxes on the home. Ann pays for her fire insurance as well as any maintenance on the home. In return for her gift, Ann receives an income tax deduction based on the present value of her future gift. In addition, Ann's home will not be tied up in probating her estate at her death, but will immediately pass to Millsaps without restriction.

What are the benefits?

  • Immediate income tax deduction based on the present value of the future gift.
  • Removes the property from the potential costs and delays of probate.
  • Potential estate tax savings since property is excluded from taxable estate.

 

For more information contact:
Gift and Estate Planning Services
Millsaps College
P.O. Box 151191
Jackson, MS 39210-1191
(voice) 601-974-1035  (fax) 601-974-1088

DISCLAIMER: The information contained on this page is for educational purposes only.  The reader understands that Millsaps College is not rendering legal advice and that the reader should seek independent legal counsel when contemplating estate planning decisions.