Is a life estate a form of ownership?
A life estate is a type of joint property ownership. Under a life estate, the owners have the right to use the property for life. Typically, the life estate process is adopted to streamline inheritance while avoiding probate.
What do you need to know about a life estate deed?
A life estate deed is a legal document that changes the ownership of a piece of real property. The person who owns the real property (in this example, Mom) signs a deed that will pass the ownership of the property automatically upon her death to someone else, known as the “remainderman” (in this example, Son).
Who is the remainderman on a life estate deed?
A life estate deed is a transfer of the ownership of the real property that is the subject of the deed to one or more persons (the “remainderman”), while retaining ownership of a life estate in the property by the person(s) transferring the property (the “life tenant”).
Can a mom reverse a life estate deed?
No easy reversal. A life estate deed is a legal transfer of title in the property. Mom can’t undo it if she changes her mind, unless Son agrees to transfer it back to her. Property taxes. Mom must continue to pay property taxes on the home during her life, which would not be the case if she gifted or sold the property to Son during her lifetime.
Can a beneficiary be added to a life estate deed?
Today, it is possible to re-title the ownership of many assets by adding a beneficiary. When the asset is real property, for example, your house, this occurs through the use of a life estate deed. However, life estate deeds are not a fix-all.
How does a deed for a life estate work?
A life estate deed typically works like this: parents sign a deed transferring their home to their children for nominal consideration (i.e. $1.00). The deed includes a provision stating that the parents “retain the right to use and occupy the property during their lifetimes,” a so-called “life estate” in the property.
Can a Lady Bird deed be used for a life estate?
In states that recognize lady bird deeds or TOD deeds, the probate avoidance benefit of a life estate deed can be achieved without the loss of control. Life estate deeds are most often used in states that do not offer lady bird deeds or TOD deeds. Life estate deeds work by dividing the property into two types of interests.
What happens if mom assigns her life estate to her friend?
Mom’s elderly friend lived with Mom during her last few years and helped take care of Mom. Mom wishes to assign her life estate to her friend in gratitude, but then dies without making the assignment. Mom’s friend must move out right away because Adam and Beth now own the property.
Who are the children of a life estate?
Mom has two adult children, Adam and Beth. Mom visits an attorney, who assists her in executing a life estate deed. The legal effect is such that Mom keeps a life estate interest in the home (the right to use and occupy the home during her lifetime).