Case Study: Gift of Texas Ranch Subject to Retained Life Estate
by Dennis Bidwell
Take-aways from this gift scenario:
1. A retained life estate gift can accomplish essentially the same charitable results as leaving a property by bequest, with two important exceptions:the owners are entitled to a current income tax deduction when they donate the property subject to a retained life estate (unlike a gift by bequest); and the donors can enjoy the satisfaction, and praise, for making the gift in their lifetimes, rather than such recognition coming posthumously.
2. In the case of a property gift likely to generate a very large tax deduction, the donor can make fractional interest gifts over time, thus spreading out their tax deductions over sufficient time to enable use of such large tax deductions.
3. The non-profit recipient of the gift, based in Virginia, was able to assemble a team of experts to structure and close this gift in Texas. Such expertise had its cost, but was well worth it in relation to the ultimate value of the gift.
George and Jennifer Jackson were owners of a 150-acre ranch in Karnes County, Texas, that they used on the weekends and as a base of operations for their frequent birding expeditions. Their primary residence was on the outskirts of San Antonio.