Legacy Planning Using Real Estate – Part 2


John and Susan have property with expansive views on Mt. Crested Butte. Over the years the lot has increased in value. It is now worth $400,000. John is 72, Susan is 70, and they are beginning to think about retirement and the need for retirement income.

They have been discussing their options with their CPA. One option was giving 25% of the property to their church prior to the sale. (See Legacy Planning Using Real Estate – Part 1, Aug. 8 issue of Contact.)

Another option would be to establish a Charitable Remainder Unitrust. The Unitrust is a special trust that pays income to family members. After all of the payments have been completed, the remainder is distributed to qualified charities.

Since John and Susan desire to leave a legacy to their church, this is a very attractive option. In addition, the trust bypasses capital gains tax and provides a charitable income tax deduction. If they sold the property, the capital gain would be $360,000. By establishing the Unitrust, they would avoid the capital gains tax and receive an income tax deduction of $170,360.

The trust would pay John and Susan 5% of the fair market value for their lifetimes. After their lifetimes, their church would receive the remainder. See Summary of Benefits, at right.

Contact David Battles, CPA, at 800-259-6863 or dbattles@okumf.org to learn more about how you could benefit from a gift of real estate.

Please note: The names and images are representative of a typical donor.

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Summary of Benefits

Property Value.....$400,000
Capital Gains Tax Savings on $360,000.....$67,680
Charitable Deduction Tax Savings on $170,360.....$56,220*
Total Tax Savings.....$123,900*
Income to Family (20.9 years).....$510,000
Remainder to their church.....$600,000

*Includes only Federal income tax

The Oklahoma United Methodist Foundation
4201 N Classen Blvd • Oklahoma City, OK 73118

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