You can donate your property outright, place it in a trust or gift it but retain the right to live in it, or give it through your will. All of these methods will enable you to enjoy personal financial benefits while supporting Earlham in a meaningful way.
Outright Gifts of Real Estate
An Outright Gift is the simplest and most straightforward way to make a gift of real estate to Earlham. Such a gift provides maximum benefit to the College because the full value of the asset can be put to work immediately in accordance with your wishes, as soon as the property is sold. Assuming the property you gift has been held for more than one year, your outright donation may generate a charitable income tax deduction equal to the appraised fair market value of the property (as determined by a "qualified" appraisal). Such a donation allows you to avoid the capital gains tax and to remove the value of the property from your taxable estate.
Retained Life Estate
A Retained Life Estate is a gift plan defined by federal tax law that allows you to donate your property to Earlham while retaining 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 Earlham.
Some alumni and friends who have contemplated leaving property to Earlham through their will have decided instead to use a retained life estate arrangement, because, unlike a bequest, this arrangement generated an income tax deduction, and allowed them to enjoy recognition during their lifetimes for this thoughtful future planning. When your Retained Life Estate ends, Earlham can then use your property or the proceeds from the sale of your property for the purpose you designate.
Using Real Estate to Fund a Life Income Arrangement
By funding a trust with your gift of real estate, you can receive an income stream for life for you, your spouse, or other beneficiaries. You also receive an income tax deduction for a portion of your gift, avoid capital gains tax, and save on gift and estate taxes. In the future, your gift will benefit Earlham according to terms you determine in conjunction with the college.
Include Us in Your Will
You can also make a gift of real estate in your will. Because a gift in your will is revocable (that is, you can change it at any time during your life), you will not be able to take an income tax deduction during your lifetime, but the property is eligible for a charitable estate tax deduction upon your death. Another option to consider is to bequeath full title to a heir and make Earlham a secondary beneficiary, in case that person does not survive you.
If you don't need to make a new will now for any reason, ask your attorney to draw a brief codicil for this purpose. This bequest illustration (PDF) may assist you as you explore the possible inclusion of Earlham in your will.