A retained life estate is a gift plan defined by federal tax law that allows you to donate a personal residence (including a vacation home) or a farm to a charity while retaining the right to live there for a particular period of time. You thereby receive a large income tax deduction and simplify the administration of your estate upon death.
As the creator of a retained life estate, you would irrevocably deed to Mount Vernon the residence or farm, but in the deed you would specify that you can use the property for the rest of your life, a term of years, or a combination of the two. 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 Mount Vernon. You can even donate to Mount Vernon the rest of your lifetime right to live on the property, thereby qualifying for an additional income tax deduction.
It is also possible to create a retained life estate for someone else – a spouse or a sibling, for example. You can do this during your lifetime or upon death through your will. In addition, a retained life estate gift can be paired with another gift arrangement, such as a charitable gift annuity. Regardless of how you decide to proceed, when the retained life estate ends, we can then use your property or the proceeds from the sale of your property for the purpose you designate.
Although subject to approval by Mount Vernon, a retained life estate donation represents a generous lifetime gift that can be appropriate for people in various circumstances. It is generally most appealing, however, to those age 65 or older who know they would eventually like the property in question to benefit Mount Vernon.
Example
Vivian, age 74, bought her house for $60,000 several decades ago and has since paid off the mortgage. It is now worth $500,000, and an appraisal indicates that $140,000 of this is attributable to the land on which the house sits, with the house itself having a useful life of 45 years and a salvage value of $25,000 at the end of that period. Even though she has thought of simply leaving the house to Mount Vernon through her will, she decides instead to deed it to Mount Vernon now and retain the right to live there for the rest of her life. In so doing, she secures the following benefits:
1) She will qualify for a federal income tax deduction of approximately $240,000. Because deductions for this and other gifts of long-term appreciated property are limited to 30 percent of a donor’s adjusted gross income, Vivian will likely be able to claim only a portion of the deduction this year. Nevertheless, any unused deduction can be carried forward into the following year as many as five times, subject each year to the same 30-percent limitation.
2) Vivian does not recognize any capital gains, and an asset potentially subject to estate tax is removed from her estate—and is therefore no longer subject to eventual probate. Probate is the sometimes cumbersome, lengthy and expensive legal process of settling the estate of a deceased person, specifically resolving all claims and distributing the decedent's property.
3) She will have the peace of mind of knowing she can continue to live in a place she has come to regard as “home” for as long as she lives. If she ever wants or needs to move out, a number of options are available to her.
NOTE: This example is based on rates effective in July 2007.
Join Our Legacy Society with Your Planned Gift
If you include Mount Vernon as a beneficiary of a retained life estate, you become a member of our legacy group: the Ann Pamela Cunningham Society. Ann Pamela Cunningham founded the Mount Vernon Ladies' Association in 1853 and tirelessly gathered support from across America to rescue George Washington's home, sparking the U.S. historic preservation movement.
Our hope is that you will let us know about your planned gift so we can thank and recognize you.
You will receive these privileges of membership in the Ann Pamela Cunningham Society:
· Personalized certificate of appreciation
· Free subscription to Mount Vernon’s Yesterday, Today, Tomorrow newsletter
· Mount Vernon’s annual report
· Updates on Mount Vernon news
· Invitations to events and special evenings
· Recognition of your planned gift in Mount Vernon publications
(unless you prefer to remain anonymous)
Special Considerations
Please contact us about restricting your gift to the specific Mount Vernon program(s) of your choice.
Unrestricted contributions are preferred; however, we also welcome a conversation if funding a specific program is critical to you. We have many projects – both short-term and ongoing – at Mount Vernon for which we seek support. We can tell you about all the available options today – and tomorrow, when posterity will visit and revere George Washington’s home and legacy.
Gifts to Mount Vernon may be made in memory of any deceased person(s) or in honor of any living person(s). If you give us permission to list your planned gift in our annual report, then we will list your name along with your brief gift dedication.
Other Types of Planned Gifts that May Interest and Benefit You
If you are considering a retained life estate to benefit Mount Vernon, be aware that other gift types – such as an outright donation of securities or real estate, a charitable gift annuity, or a charitable remainder trust – may be suitable or preferable, taking into account your goals and needs.
A charitable gift annuity, for example, can be set up for 
you and/or someone else while you are alive. Or you can arrange through your will or through some other element of your estate plan to establish a testamentary charitable gift annuity that will result in tax-favored lifetime payments being made to a beneficiary(ies) of your choice.
Of course, arranging a gift for Mount Vernon through a will or through some other element of an estate plan – e.g., including our organization as a beneficiary of a financial, retirement, or insurance account or asset – is also an act of considerable generosity that many people can afford even if a large lifetime gift is not realistic.
Our development staff can help you plan the right gift in light of your assets, income, and family and other estate or financial obligations. You may be able to be a greater philanthropist than you realize. Would you consider making the gift of a lifetime to Mount Vernon if we can show you how?
Planned Giving Calculator
Our web-based calculator can provide you with charitable deduction calculations for a broad range of planned gifts. You may explore a variety of gift options privately, by entering your basic information, customizing your figures, and changing your options any time. This interactive planned giving calculator provides you with an additional tool to evaluate your various planned gift options.
Note: Mount Vernon does not provide tax or legal advice. Gift calculations are provided for illustrative purposes only. The actual values may vary based on the timing of your gift. Please consult your attorney or tax advisor prior to entering into any gift planning arrangement.
We Invite You to Contact Us
In all of our 150 years of existence, the Mount Vernon Ladies’ Association has neither requested nor accepted government funding. We are a 501(c)(3) charity and our programs and endowment depend on your support. Our tax identification number is 54-0564701.
Direct your confidential inquiries and notifications about legacy gifts for the benefit of Mount Vernon to:
Mount Vernon Gift Planning
P.O. Box 110, Mount Vernon, VA 22121
1-800-780-1799 / specialgifts@mountvernon.org
Information also available at mountvernon.org/specialgifts.
This information provided by Mount Vernon is not financial, tax, or legal advice.
You should consult your advisors before making your charitable giving decisions.
