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Can I Give Real Estate to a Charity in my Estate Plan?

In unpredictable economic times, many donors may be wary of making large donations of cash, even to charities they would otherwise like to support.

Many nonprofits are now encouraging donors to make gifts of non-liquid assets, like real estate. If it’s thoroughly vetted and properly structured, real estate gifts can help donors meet their financial planning and philanthropic goals, and at the same time give charities a new source of funding.

Real estate holdings account for a major part of the assets in U.S. households. However, just a small proportion of charitable contributions are land or buildings. Many individuals with surplus real estate may want to consider donating their appreciated property to charity, instead of selling the property themselves. That’s particularly true, if they want to minimize taxes or generate retirement income.

The fact that many real estate gifts are more complex and costlier for charities to process and manage than cash donations, means that it’s important to think about donating to charitable organizations that have developed a clear set of gift acceptance policies and procedures in place. As a prospective donor, you should look for policy guidelines that detail the kinds of properties that will and won’t be accepted. Perhaps the charity only accepts commercial or undeveloped land.

It is also important to look for the types of estate planning structures donors are allowed to use, when making these gifts. These can include charitable remainder trusts, charitable gift annuities and retained life estates. You should also see if there are any stipulations on the charity’s acceptance of properties that come with mortgages or other risk factors.

Once a real estate gift has been approved on a preliminary basis by a charity, the donor may then be required to provide additional information about the property. This “due diligence” phase typically entails a title search, assessments of the local market and environmental conditions, a professional inspection and a site visit by the organization’s representative. It is customary for the charitable organization to defray the costs of conducting these studies.

After the due diligence has been finished, and the charity has agreed to accept the gift, the donor will be notified of the results of the investigations, and of the plans for how the final transfer of the property will take place.

This type of donation can offer many advantages to donors, including generating income, deferring or lowering taxes and decreasing the expenses of property maintenance. Be sure to consult our estate planning attorneys to discuss real estate contributions to charities.


ReferenceTC Palm (November 8, 2018) “Donation of real estate is nice form of charitable giving”
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