Life Estate Agreements
With a life estate agreement, a donor transfers the title of a residence, vacation property, or farm to Centenary College, while retaining the right to live there and use the property for life. The donor benefits from a tax deduction at the time the gift is made as well as benefiting from a possible reduction of estate taxes and avoidance of capital gains taxes.
Example: James, 75, and Helen, 70, purchased a vacation home 20 years ago for $75,000. Its current market value is $300,000. James and Helen's only child owns her own vacation home and has encouraged her parents to donate the property to Centenary, their alma mater, to establish an endowment for the Student Activities Program. In the year of the gift, the donors receive an income deduction of approximately $82,000 based on their ages and the value of the property. They completely avoid the tax on the capital gain of $225,000 which they would have realized if they had sold the home. They retain the right to use the property as long as they live, and the make a fine gift to Centenary College.