ACES Office of Advancement

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Retained Life Estates

What Is It?

A retained life estate allows you to make a gift of your personal residence or farm to the UIF after your death while allowing you and other named beneficiaries to live in the property. Upon the death of all beneficiaries, the UIF receives the property and has the right to sell it to convert it to cash to support the programs you designate. The university will not benefit from the gift until the death of all the named beneficiaries.

When Might a Retained Life Estate Make Sense?

Retained life estates are most commonly used by donors who seek an immediate income tax deduction, do not wish to pass their residence onto their heirs, and wish to remain in their home. Many donors find that a retained life estate allows them to enjoy their home during their lifetime while relieving their heirs of the burden of selling it. Moreover, for large estates, a retained life estate gift helps to eliminate or reduce taxes because the value of the home is removed from the estate.

Is an Income Tax Deduction Available for a Retained Life Estate?

Gifts made via a retained life estate are eligible to receive an income tax deduction. Deductibility is calculated on a case-by-case basis and depends upon several factors. The UIF is happy to prepare this calculation without any cost or obligation. In addition to the income tax savings, property is excluded from the estate when calculating estate taxes.

What are the Benefits?

  • A legacy to programs you supported during your lifetime to continue after your death
  • Reduced estate taxes. Estates over $5 million for individuals dying before January 1, 2013 are subject to federal estate taxes.  Congress has not passed legislation regarding estate tax provisions beyond this point in time.
  • Allows donors to retain use of home during their lifetime
  • May relieve heirs who are not interested in the property from the burden headaches of selling it
  • Removal of the asset from the estate

Are There Assets to Consider in Funding a Retained Life Estate?

Only personal residences and farms may be used to fund a retained life estate.  All property received must be reviewed by the UIF before acceptance.

Questions?

Contact the College of ACES Office of Advancement at 217-333-9355 and ask to speak with a major gift officer.