What is a retained life estate?

A retained life estate is a gift plan defined by federal tax law that allows you to donate your home, farm, or vacation property to Northland College while retaining the right to live in it for the rest of your life.

As the creator of a retained life estate, you irrevocably deed to Northland College your home or farm, but retain the right to live in it for the rest of your life, a term of years, or a combination of the two. You may also use a vacation home to create this kind of gift.

While you retain the right to live on your property, you continue to be responsible for all routine expenses - maintenance fees, insurance, property taxes, repairs, etc. If you later decide to vacate your property, you may rent all or part of the property to someone else or sell the property in cooperation with Northland College.

When your retained life estate ends, Northland College can then use the proceeds from the sale of your property for the purpose you designate.

Example:
You irrevocably transfer your home or farm, which is long term appreciated property with a total value of $750,000 and a cost basis of $200,000, to Northland College, and the right to live in it is retained for the lifetime benefit of an individual, age 78.

Benefits include:

1. You will qualify for a federal income tax deduction of approximately $547,350. Your deduction may vary modestly depending on the timing of your gift.
   Note that deductions for this and other gifts of long term appreciated property will be limited to 30% of your adjusted gross income. You may, if necessary, take unused deductions of this kind over the next five years, subject to the same 30% limitation.
2. You will retain the right to live on your property for the rest of your life.
3. Your estate may enjoy reduced probate costs and estate taxes.
4. You will provide generous support for Northland College.

To learn more about how you can include Northland College in your estate planning, contact Kristy Liphart, interim vice president of institutional advancement, at (715) 682-1496  kliphart@northland.edu or Lois Albrecht, director of gift planning, at (715) 682-1394 lalbrecht@northland.edu

These calculations are for illustration purposes only and should not be considered legal, accounting, or other professional advice. Your actual benefits may vary depending on the timing of the gift.