Why do people want to create a life estate?

There are several reasons why a person may create a life estate. These include: The homeowner wants to avoid probate for their children. By creating a life estate, the property avoids probate and the remainderman immediately becomes the owner of the property upon the life tenant’s death.

Who is the owner of a life estate?

Each of the people in a life estate has an ownership interest in a piece of real estate — typically your primary home — but over different time periods. The person who holds the life estate is called the life tenant. So that’s you if you’re the homeowner. As the life tenant, you own the property during your lifetime.

What are the drawbacks of a life estate?

If property is subject to a life estate, this can adversely affect financing on the property. The life tenant could get stuck with the remainderman’s heirs. It’s possible that the remainderman could unexpectedly die before the life tenant. Shouldthat happen, the remainder interest would pass to the remainderman’s heirs.

What does it mean to have a life estate deed?

Life Estate Deed A life estate deed permits the property owner to have full use of their property until their death, at which point the ownership of the property is automatically transferred to the beneficiary.

When do you need to consider a life estate?

You might want to consider a life estate if: You want to transfer the property but retain access during your lifetime. You want some measure of certainty as to who gets the property at your death. You think you might need to use Medicaid to go into a nursing home after five years have passed, and you want to avoid Medicaid liens on the property.

How does a life estate work in real estate?

A life estate allows a person to arrange joint ownership of a property that they will live in until their death, at which point it goes to the second owner. Loading Home Buying Calculators