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Retained Life Estate

At times, donors may wish to continue living in their home or farm and still give the property to Whitman.

Through a retained life estate, donors may deed a remainder interest in real estate to the College. They may use the property as they like while they are alive, living there or renting it to others. They are responsible for maintaining the property and for paying taxes and insurance premiums. At their death, the property will pass directly to Whitman.

By donating a remainder interest in real estate, donors receive a current income tax charitable deduction for the value of Whitman's remainder interest. This deduction depends on a variety of factors, including the donors' ages and the depreciable value of improvements, but it will always be less than the fair market value of the property.

Key Points:

  • A donor who transfers ownership of his or her residence to the college can make a current gift to the college and retain the right to live in his or her home.
  • Upon the death of the donor, Whitman College takes possession of the home.
  • The donor receives a current charitable tax deduction and removes a large asset from his or her estate.
  • If the donor decides not to live at home, the residence may be sold and the donor will receive a payment equal to the value of his or her life estate interest.
  • Any major improvements to the home may qualify for additional charitable deductions.

Donors should be cautious when considering a gift of a remainder interest in a home or farm if they anticipate needing funds from the sale of the property at some time in the future. If this were to occur, the proceeds would be split (on an actuarial basis) between the donors and Whitman, and each year as the donors get older their share of the proceeds decreases. In addition, such a gift would likely preclude the donors from later taking out a home equity loan using the residence as collateral.

Please contact the Office of Gift Planning with any questions about establishing a retained life estate with Whitman.

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