Establishing a Life Estate is a relatively simple process in which you transfer your property to your children, while retaining your right to use and live in the property. Life Estates are used to avoid probate, maximize tax benefits and protect the real property from potential long-term care expenses you may incur in your later years. Transferring property into a Life Estate avoids some of the disadvantages of making an outright gift of property to your heirs. However, it is not right for everyone and comes with its own set of advantages and disadvantages.
Life Estates create two different categories of property owners: the Life Tenant Owner and the Remainder Owner. The Life Tenant Owner maintains the absolute and exclusive right to use the property during his or her lifetime. This can be a sole owner or joint Life Tenants. The Life Tenant maintains responsibility for property taxes, insurance and maintenance. The Life Tenant is also entitled to rent out the property and to receive all income generated by the property.
Remainder Owner(s) automatically take legal ownership of the property immediately upon the death of the last Life Tenant. Remainder Owner(s) have no right to use the property or collect income generated by the property and are not responsible for taxes, insurance or maintenance, as long as the Life Tenant(s) is still alive.
There are several advantages to establishing Life Estates. They are simple and inexpensive to establish, merely requiring that a new Deed be recorded. Life Estates avoid probate; the property automatically transfers to your heirs upon the death of the last surviving Life Tenant. Additionally, the Life Tenant’s right to use and occupy property is protected throughout the life of the Life Tenant.
Please contact the Law Offices of Bernadette M. Crowley at (718) 423-5500 or firstname.lastname@example.org for more information.