Estate Planning: The Benefits of a Life Estate

A life estate is a way for someone to transfer ownership but still maintain the right to use a property. The person who then holds title is not allowed to transfer it or squander it, as it will go to a remaindermanupon the death of the original owner. Upon his or death, it is already predetermined who will receive it next without having the property having to go through the probate process. Property held in a life estate is not subject to being a part of the deceased’s total estate, thus it is protected from the possibility of being transferred to a husband or other party that the initial owner would not wish it to go to.

This would work very well in a case where someone owned property, needed to have the use of it but was unable to qualify for Medicaid or other assistance because it was considered too large of an asset. During their life, they would still have a place to live but would not be penalized for owning it. Upon their death, it could go directly to their child or children (or another named party). The property would be protected from being squandered by the first recipient. It would also be protected from any creditors that might be owed.

Another scenario in which the life estate could work is when someone wishes to provide for a terminally ill grandchild, for example. They could allow the parents of the child ownership as long as the grandchild were alive, in order to provide for the grandchild. Upon the grandchild’s death, the property would pass to the remainderman. This would be particularly effective if someone did not wish to provide for a son or daughter in law for the duration of their own lifetime, but only provide for the grandchild.

As family situations become more complex in modern society, the life estate can be a fairly simple way to protect certain assets and provide for one’s family members. When correctly set up by a qualified attorney, life estates protect property from claims that often arise during the probate process. In addition, they allow for the original owner to have use of their home or other property as long as they remain alive.


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