Gift Planning

Gift of Undivided Interest

While a donor may wish to make a charitable contribution of a parcel of real estate, he or she may also be reluctant to part with complete control over the property. There is a method under which a donor may be able to make a charitable contribution and secure an immediate tax deduction while retaining partial control over the property.

Generally, a charitable income-tax deduction is not allowed for a contribution (not in trust) of an interest in property that consists of less than the donor's entire interest in the property. However, there is an exception to this partial-interest rule. The exception specifies that a deduction is allowed for the value of an undivided portion of a donor's entire interest in the property. An undivided portion must consist of a fraction or percentage of each and every substantial interest or right owned by the donor in such property and must extend over the entire term of the donor's interest in the property.

Example: Mr. Walls wants to make a special gift to Colgate, whose work is meaningful to him. He owns a vacation home and had considered contributing the property. However, he uses the home periodically and does not wish to give up complete control over the property. After discussing the matter with his attorney and a representative of Colgate, Mr. Walls decides to give Colgate the right, as tenant in common, to possession and control over the property for a portion of each year. Thus, Mr. Walls is able to use the home himself during part of the year, while making a charitable contribution and obtaining a valuable current tax deduction.

The discussion herein is general in nature and may not apply to all individuals. Prospective donors are urged to consult their personal tax and financial advisors concerning the specific consequences of making gifts to Colgate. We would be pleased to discuss, in confidence, ways in which you may support Colgate. These measures may also have an impact on your estate planning.