At the heart of the Life Estate technique is the Life Estate Agreement, which sets forth all of the governing provisions as required by law.

The Life Estate Agreement sets forth all of the required provisions, including but not limited to:

  • Whether the retained interest is for the life of the Donor, the life of the Donor’s spouse (or both). In addition, it may be possible to measure the retained interest by the life of a third party (such as a Tenant)
  • The recipient organization;
  • The fact that the Gift is Irrevocable;
  • Specific Interests retained by the Donor during the measuring period, as allowed by law;
  • Obligations of Donor and/or Charity for paying taxes, insurance, and other associated expenses during the lifetime of the Donor; and
  • Additional Limitations and Provisions, as may be allowed by law.

Warning About the Complex Nature of Life Estates

The Life Estate technique is very complicated, and success is dependent on complex Internal Revenue Service rules and regulations, as well as actuarial calculations and valuations.

Therefore, you should not seriously consider this area without first consulting competent legal counsel.

John Erik Fraker, Esq.

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John Erik Fraker, Esq.

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