What is the difference between a trust and a life estate?
Life estates split ownership between the giver and receiver. An irrevocable trust allows an individual to give away part of an asset.
When did John Doe Sr sign a life estate deed?
We represent Jane Doe, the daughter of John Doe, Sr. In 2000, John Doe, Sr. signed a life estate deed. He retained a life estate for himself and his wife, who was not the mother of his children.
How is the interest on a life estate measured?
One interest is measured based on the owner’s lifetime and is called a life estate. The interest that passes at the owner’s death is called a remainder or remainder interest. The life estate and remainder interest are then transferred to different owners. There are three categories of owners:
Who is the owner of the life estate?
His wife’s ownership interest in the property vested at the time of his death. Unexpectedly, two months after John Jr.’s death, his wife committed suicide. She was survived by a daughter from a previous marriage. Upon the wife’s death, her daughter’s ownership interest in the 1/3 interest in the property vested.
How does a life estate deed work and how does it work?
How Life Estate Deeds Work Life estate deeds work by dividing the property into two types of interests. One interest is measured based on the owner’s lifetime and is called a life estate. The interest that passes at the owner’s death is called a remainder or remainder interest.
We represent Jane Doe, the daughter of John Doe, Sr. In 2000, John Doe, Sr. signed a life estate deed. He retained a life estate for himself and his wife, who was not the mother of his children.
His wife’s ownership interest in the property vested at the time of his death. Unexpectedly, two months after John Jr.’s death, his wife committed suicide. She was survived by a daughter from a previous marriage. Upon the wife’s death, her daughter’s ownership interest in the 1/3 interest in the property vested.
How is the value of a life estate calculated?
The value of the parent’s life estate interest is calculated based on the age of the life estate holder and an interest rate mandated by the IRS. For example, in March 2017 the current value of a life estate held by a parent who is 80 years old is about 17.4% of the value of the property.
Can a parent force a child to sell a life estate?
However, when the parents have retained a life estate, the creditors of a child cannot force the sale of the property to satisfy a child’s debt. That is because a child’s creditors are not in any better position than the child. Since the child could not sell the property and force the parents out of the property, neither could a child’s creditor.