|This content is not yet available over encrypted connections.|
Monday, June 19, 2017
Life Estate Deeds | How They Can Be Helpful and How They Can Be Risky
Summary: Estate planning is a field where there often can be multiple different paths to achieve the same goal. There are many different ways to transfer real estate that avoids probate. Some of these methods may be more complicated and risky than others. Using a revocable living trust, transfer on death deed or enhanced life estate deed may allow you enjoy the advantages of simplicity and ease (and probate avoidance) while also escaping some of the complications and risks associated with other techniques such as ordinary life estate deeds.
For a lot of people, one of the biggest (if not the single biggest) asset for which they seek to plan is their home. Estate planning when it comes to your home can be very important to you for multiple reasons. One very obvious reason is that, in many cases, the home is largest single asset in that’s person estate. In addition to the monetary consideration, there’s also the fact that, for many families, the home may represent the asset with the highest (or nearly the highest) emotional and sentimental value. There’s a often a desire, not only to craft a plan that is simple and cost-saving, but also one that hopefully ensures that the home will transfer to someone who will “care” for the home properly.
One method some people rely on to accomplish this planning goal is the life estate deed. Life estates do have certain advantages. They are simple to set up and they are simply to deal with after the owner dies. At the death of the owner (technically known as the life tenant), the beneficiary (technically known as the remainder owner) simply provides a copy of the deed and proof of death.) They also have the advantage of avoiding probate (as long as they’re set up properly and the beneficiary doesn’t die before the owner does.)
However, they have shortcomings, too. Let’s say you set up a life estate deed on your home so that it transfers to your daughter when you and your spouse die. Now let’s say you and your wife decide you want to sell, whether it is to downsize, to relocate somewhere warmer and sunnier or whatever reason. You don’t get to make that decision alone anymore. The legal paperwork to complete the sale must be signed, not only by you and your spouse, but by your daughter, too. The same thing is true if you decide, for example, to take out a second mortgage on your home. Just like with a sale, your daughter has to sign off on it. Something similar is true if you want to change or undo the life estate you’ve set up. It is technically possible to do, but it has to be approved not only by you by also by the person you named as the remainder owner in your life estate deed. Even if everybody agrees, this can have negative tax or Medicaid planning consequences.
Fortunately, there are options that are often better ways to deal with your home as part of your estate planning. Some states have what they call a “transfer on death” deed. Others have what’s called an “enhanced life estate” deed. These deeds will avoid probate and are relatively simple to set up and deal with after your death. Unlike regular life estate deeds, however, they are very easy to change or undo and, if you decide you want to sell or mortgage your home, you are free to do without obtaining permission, or even notifying, the person you’ve named as the beneficiary under the deed.
Even if your state has neither transfer on death deeds or enhanced life estate deeds, all states recognize revocable living trusts. Living trusts can also be a relatively simple way to plan for your home and avoid probate. Depending on your circumstances, it is possible that there may be other aspects of your planning needs and goals that may make a living trust a better choice for you even if your state has transfer on death deeds or enhanced life estate deeds. Your estate planning attorney can help you sort out what’s best for you.
This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.
This article written and published by:
8039 Cooper Creek Blvd
University Park, Florida 34201
Click Below To See Other Legacy Assurance Plan Related Sites: