A life estate deed is one way of transferring ownership of real property that offers a number of estate planning advantages.
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by Brette Sember, J.D.
Brette is a former attorney and has been a writer and editor for more than 25 years. She is the author of more than 4...
Updated on: July 18, 2024 · 3 min read
A life estate deed is a legal document used in real estate to grant ownership of property to an individual for the duration of their life. When that individual passes away, property ownership automatically transfers to another person or entity of the original owner's choosing.
How does a life estate work? The person who owns the real property (in this example, Mom) signs a deed that will pass the ownership of the property automatically upon her death to someone else, known as the "remainderman" (in this example, Son). As part of the deed, Mom keeps what is called a life estate, which means she can continue to live on and use the property for the rest of her life.
She becomes a "life tenant." The deed would normally include language like "to Mom for life, to Son as the remainder." The life estate deed is completed when Mom signs the document and it is filed with the county.
There are many benefits to creating a life estate deed, sometimes called a life estate trust:
In addition to benefits, there are some drawbacks that should be considered before deciding on this course.
There are other ways to achieve the same outcome as a life estate deed:
Mom can place the property in a revocable living trust with Son as the trust beneficiary. By doing so, Mom transfers ownership of the home to the trust, yet she can continue to live there the rest of her life. Mom can set up the trust to distribute the home to Son upon her death. She still avoids probate, yet she has the power to make any change she wants to the trust (including canceling it entirely or changing beneficiaries) at any point in her life.
Another option is for Mom to sell the property to Son during her life. Mom gets the money, which could be used for her care, and Son could agree to let her live there rent-free.
It is also possible to create a life estate in a will. Mom could leave Stepdad a life estate in the property in her will, with remainder to Son.
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