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Philanthropic estate planning case

Case Conclusion Date: 10.31.2008

Practice Area: Estate Planning

Outcome: Eliminitated Estate Tax, Established Legacy, Saved Commission Through Private Sale of Residence to Charity

Description: Widowed client with taxable size estate wanted to ensure maximum control over her assets while alive and well, provide for herself in the event of incapacity, and ultimately leave a lasting philanthropic legacy at a Major University in honor of her late husband. Client also wanted to move from her single family home to a condominium, though she was concerned about getting her home in sale-ready condition while looking for a new residence. We considered a number of split-interest, life-income gifts to the University but determined that client’s concern about outliving her assets made her better suited for a post-mortem charitable gift. We established and funded a Revocable Living Trust (RLT) for client, with expanded incapacity provisions, which allowed client to maintain control over all of her assets. At her death, the will Trust distribute the bulk of her estate to the University for the purpose of establishing an Endowed Fund in memory of client’s husband, and provide scholarships in perpetuity. The gift to the University will qualify for the charitable estate tax deduction and will reduce client’s estate tax liability to zero. During the course of designing and implementing client’s estate plan, we discovered that the University had an interest in acquiring client’s home, which abutted the University. We negotiated a private sale to the University for full fair-market value; saving the client a real estate broker’s commission, and providing client with the right to live in the house, rent-free, for 9 months after the sale, so that she could have sufficient time to find and purchase an appropriate condominium.

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