Donate your Personal Property and Continue to Make Full Use of it
A residual interest gift is an arrangement where you irrevocably give real estate or personal property to Indspire while retaining the right to use the property for life or for a term of years.
Benefits to You
- Continued Use – As a donor you retain the right to use the property with the ability to continue using it as before, with no impact on your lifestyle. If married, you could retain use for your lifetime and also for the lifetime of your surviving spouse. Alternatively, use could be retained for a certain period of time.
- Tax Advantages – When the property’s title passes to the organization (with your life or other interest registered on title), you receive an immediate donation receipt for the present value of the donated residual interest.
- Other Advantages – If the use of the property is retained by you only, or by you and your spouse, you must recognize only the portion of the capital gain allocatable to the donated residual interest. There is no taxable capital gain when you give a residual interest in a principal residence.
- Reduced Fees – The gift removes the donated property from your estate, resulting in lower probate and other estate-related fees in the future. Also, your wishes are less susceptible to be challenged by heirs than if you had made a bequest.
Making a Gift of Residual Interest
The property is appraised and the value of the residual interest is determined. Legal documents are signed by you and Indspire and filed in the land title office. Indspire will then issue a donation receipt for the present value of the donated residual interest. If appreciated property is donated, the amount of the capital gains must also be calculated.
The property vests in Indspire, subject to the life interest retained by you. Upon your death or expiration of the term of years, your right to use the property ceases. Indspire then has complete control of the property.
Please Seek Expert Advice
Indspire strongly recommends that you seek professional advice to ensure your financial goals are considered, your tax situation reviewed, and that your planned gift is tailored to your circumstances. Indspire recommends that you consult your lawyer or estate planner regarding the specific wording and creation of a gift of residual interest or other type of planned gift.