Using real estate assets to make a gift to the FarmHouse Foundation may be a good fit for your personal situation and that of your family. Gifts of land or real estate, though not complicated, do require planning. Once arranged, such gift plans deliver the additional benefit of peace of mind – and pride that you are keeping your land’s legacy, as well as your own, alive. The FarmHouse Foundation is available to help you make your dream of creating a gift of great purpose a reality.
How it works
Gifts of real estate may include developed property, undeveloped property, or gifts subject to a prior life interest. The Foundation will not accept a fractional interest property absent exceptional circumstances and then only upon approval of the Executive Committee of the Foundation.
Before a real estate gift can be accepted, the Foundation requires an initial environmental review of the property to ensure that the property has no environmental damage. In the event that the initial inspection reveals a potential problem, the Foundation shall retain a qualified inspection firm to conduct an environmental audit. The cost of the environmental audit is generally the expense of the donor.
When appropriate, a title binder shall be obtained by the Foundation prior to the acceptance of the real property gift. The cost of this title binder shall generally be an expense of the donor.
In addition, gifts of real estate will be reviewed by the Fund-Raising Committee of the Foundation, and or legal counsel if necessary, with final approval by the full Board of Trustees.
It is generally the Foundation’s policy to sell gift property rather than maintain and manage it.
Making a Gift of Real Estate
Outright Gift of Land
You may gift land to benefit virtually any educational program or purpose with the FarmHouse Foundation in which you want to make a positive difference. Generally, gifting land can provide benefits that are not available to you when making an outright gift of cash, and likely will present favorable tax benefits. A few of the benefits you may receive include:
You may take a charitable deduction at the time the land is transferred. In some cases, a deduction may be carried forward for up to five additional years.
You may avoid capital gains taxes you would have incurred had you sold the land.
Gifting land during your lifetime helps reduce your taxable estate.
Gift in Your Will
Leaving real estate through your will is a convenient option for making a gift to FarmHouse after your lifetime. Real estate may be easily gifted by designating the FarmHouse Foundation as a beneficiary in your will. You retain the land throughout your life, so the availability of your assets is not diminished, should you need them. Additional benefits that may come from a gift of land through your will include:
You have the ability to designate your gift during your lifetime, and document your intent for the use of the gift in agreement with the FarmHouse Foundation.
Generally, your estate receives a charitable deduction for the value of the land, which may reduce estate taxes otherwise incurred upon your death.
Charitable Remainder Trust
When you create a charitable remainder trust, either during your life or upon your death, you or your designated beneficiary will receive income from the trust for life. At the end of the designated term, the remaining assets within the trust will be disbursed to the FarmHouse Foundation to benefit the programs you have designated. Benefits of using land to fund a charitable remainder trust include:
By choosing to fund a charitable remainder trust during your life, you may be able to make a gift to the FarmHouse Foundation without reducing either your personal income or the security you want to provide your family.
By choosing to fund a charitable remainder trust at your death, you can continue to operate the farm or utilize the land as you choose during your lifetime, and your surviving spouse or beneficiary will receive a reliable source of income after your lifetime without responsibility of managing the farm or land.
It may be possible to avoid capital gains taxes on land that has been held for more than a year.
If funded during your lifetime, an income tax deduction may be taken in the year the gift is made. In some cases, a deduction may be carried forward for up to five additional years.
The trust may decrease estate taxes proportional to the value of your charitable gift.
Gift With Retained Life Estate
A gift with retained life estate is an arrangement that allows you to make your gift to the FarmHouse Foundation now, but keep using and living on the property you love for the rest of your life and your spouse’s lifetime. With this method, you make an irrevocable commitment to gift your land or farmstead to the FarmHouse Foundation, while retaining the right to continue to live on the farm or receive income from the property. At the end of your life or that of you and your spouse, the property is transferred to the FarmHouse Foundation. Gifting your land now, instead of through your will, offers benefits during your lifetime including the satisfaction of knowing you’re creating your legacy with FarmHouse.
You may qualify for an income tax deduction in the year the gift is made. In some cases, a deduction may be carried forward for up to five additional years.
You preserve your current lifestyle, continuing to use the land for your livelihood and enjoyment.
Your gift of property to FarmHouse may reduce estate taxes otherwise incurred upon your death.
We recognize that every potential gift of land or real estate is unique and we will consider each using the following criteria:
Is the property useful for the purposes of the Foundation?
Is the property marketable?
Are there any restrictions, reservations, easements or other limitations associated with the property?
Are there carrying costs, which may include insurance, property taxes, mortgages notes, etc. associated with the property?
Does the environmental audit reflect that the property is not damaged?
All gifts of land will be reviewed by the Fund-Raising Committee of the Foundation, and or legal counsel if necessary, with final approval by the full Board of Trustees.
The FarmHouse Foundation can help you make a philanthropic impact on FarmHouse and determine ways in which you and your family may potentially benefit, but we do not give legal, accounting or tax advice. We recommend that you consult with your independent advisor (attorney, financial planner or accountant) and we will help both of you move through the planning process.
For more information about making a real estate gift to the FarmHouse Foundation, please contact Allison Rickels, Executive Director, at (816) 891-9445 or Allison@FarmHouse.org