In the field of estate planning there are many different legal devices that are utilized, and each unique situation will call for a unique course of action. We endeavor to look at the various estate planning tools that exist in our posts here on the blog, and in this one we would like to take a brief look at life estates.
Using a life estate would be a way to leave your home to your children in an efficient manner outside of the probate process. You become a life tenant, and as such you remain in your home and enjoy ownership rights throughout the rest of your life.
When you are executing a life estate you name what is called a remainderman. Under this example you want your children to inherit the home, so you make them your remaindermen.
Once you pass away they assume full ownership of the home outside of the probate process.
A life estate can also be useful if you were angling toward Medicaid eligibility. Medicaid tallies the value of all of your property when determining your eligibility. If you were to create a life estate and act as the life tenant the countable value of your home would be less than its true value because you are retaining incidents of ownership.
Life estates can also be useful for those who want to protect the interests of their children when they get remarried. You could name your new spouse as the life tenant and your children as the remaindermen. Upon the death of your surviving spouse your children would become owners of the home.