Discovering the True Value of a Home

By Mark Grzybowski, former Director of Gift Planning

Carl graduated in 1965 with a degree in electrical engineering from the University of Detroit Mercy. He met his wife, Linda, a Marygrove alumna, at a U of D basketball game. They bought a house in Troy and raised a family of five boys there. After a long career at Ford, Carl retired, and he and Linda traveled to Europe and other places they always wanted to see. Sadly, Linda became seriously ill about five years ago and passed away recently.

As a Titan fan, Carl enjoyed the success of the basketball program last year and attended a few Titan games with one of his sons. I met him at one game, and he gave me a call a few days later. We talked about his days at "dear ole U of D" and how important his education was to him. His fondest memory was living in the residence halls and his interaction with the Jesuits. "They helped me see the importance of so many things in everyday life," Carl said. "What I learned at U of D enabled me to get a job at Ford, but I walked away with so much more, including Linda," he said, with a twinkle in his eye.

Carl commented that although the house in Troy was empty now with his boys raising families of their own, he loved the neighborhood, played golf at the municipal course, attended church at the local parish and was involved in so many activities around Troy. He didn't want to move. He and Linda had planned well, and he enjoyed a comfortable income from his investments and retirement plans.

During our discussion, Carl mentioned that he could use a few more deductions but didn't feel he could part with any of his assets. I suggested that he consider making a gift of a remainder interest in his home. I explained to Carl that he simply had to give Detroit Mercy the right to have his property (his home) at his death. Through a retained life estate, he could live in his home and maintain the property just as he does now for the rest of his life. The tax consequences change and he reaps the benefits. Because the University has the irrevocable right to the property at his death, the IRS allows him a current charitable tax deduction for the value of the remainder interest in the property.

Carl discussed the matter with his sons and his financial advisor. They gave him the green light, and Carl is in the process of making some changes to his estate documents. Based on Carl's age, IRS guidelines, and the nature and value of his $300,000 home, his gift will generate a deduction of more than $147,000, which will save about $41,000 in federal income taxes. Moreover, Carl has the satisfaction of knowing that his gift will benefit Detroit Mercy and make a difference at an institution that means so much to him.

If you would like to learn more about this gift option, please contact me at (313) 993-1262 or carroltl@udmercy.edu.