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Charitable life estates

MSUWith a charitable life estate gift you can deed your home or farm to Montana State University but keep the right to use the property for the rest of your life. You will be able to make a gift to Montana State University that counts as an immediate charitable deduction and continue living in your home or operating your farm or ranch.

A Possible Scenario

Bill Johnson, 75, and his wife Mary, 73, have a home in Bozeman. Their three children each have families and careers outside the state, and don’t plan to return to Bozeman. Bill and Mary would like to donate the property to Montana State University, but they want to continue living in their home during their lifetimes. They establish a charitable life estate gift with the MSU Alumni Foundation, deeding their $450,000 home to Montana State, while retaining the right to live in the home during their lifetimes. Bill and Mary continue to be responsible for maintenance, insurance and taxes on the property, but receive an immediate charitable deduction for the gift. Based on the IRS rates, MSU will calculate the present value of its remainder interest in the residence. In this case, Bill and Mary are entitled to a charitable deduction of $320,000 for their gift as well as a Montana Endowment Tax Credit of $20,000.

Your Benefits

You receive a federal income tax deduction for the present value of the remainder interest in your home or farm. The present value of the remainder interest is based on the value of the property and the land, sales costs, and the appreciation rate of the property.

Donors paying taxes in Montana are also eligible to receive the Montana Endowment Tax Credit.

You preserve your lifetime use and are able to use and control you property while you are alive.

Next Steps

  1. Contact Kevin Brown at 406-994-4815 or plannedgiving@msuaf.org to discuss the possibility of giving real estate through a charitable life estate gift to Montana State University.
  2. View our gifts of real estate policy. 
  3. Seek the advice of your financial or legal advisor to make sure this gift fits your goals.
  4. If you include Montana State University in your plans, please use our legal name and federal tax ID.

Name: Montana State University Alumni Foundation
Address: 1501 South 11th Avenue, Bozeman, MT 59715
Federal Tax ID #: 81-6001649

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A charitable bequest is one or two sentences in your will or living trust that leave to Montana State University a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I give to Montana State University, a nonprofit corporation currently located at 1501 South 11th Avenue, Bozeman, MT 59715, or its successor thereto, ______________ [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to Montana State University or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support its mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to Montana State University as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to Montana State University as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and Montana State University where you agree to make a gift to Montana State University and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.
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