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What is a life estate?
A life estate is a type of property ownership where two or more people have ownership rights.
The "life tenant" is the person with the right to possess and use the property for the duration of their life. This means that the life tenant has lifetime use of the property. The life tenant cannot leave the property to his or her heirs. Instead, after the life tenant’s death, the property goes to the remainderman.
The remainderman (or remaindermen) is the person (or people) with the right to take possession of the property after the death of the life tenant. Remaindermen have a “future interest.” During the life of the life tenant, the remaindermen do not have a right to use the property. You can think of the remainderman as the “beneficiary” who receives the property after the death of the life tenant. After the death of the life tenant, the property passes to the remaindermen. The remaindermen will then be owners of the property.
Potential Benefits and Risks
There are potential benefits. For example, you can avoid probate, life estate deeds may play a role in Medicaid planning, and a life estate deed may allow you to stay in your home while making sure your home passes along to the people you would like it to go to.
There are also risks that you should consider. There may be tax consequences or there may be tensions between the life tenant and the remaindermen as they can have different, competing goals for the property. For example, a life tenant may be interested in maximizing profits from a property in the short term, but the remaindermen may have more long-term interests. There may be differences in what appropriate property maintenance looks like and what is waste. You should consider your relationship with potential remaindermen, and whether you think can work cooperatively with them.
Over a Decade of Legal Experience
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The Law Office of Chelsea M. Sadler, LLC. has vast experience in handling cases pertaining to Last Will and Testament, Trusts, Preparation, and Business Succession Plans. We excel in personally guiding you through these complex legal processes, explaining each step. Whether you need legal advice or action, We are here to represent you and your unique needs. Schedule a consultation today to see how we can Protect What's Important!