Let’s assume that you’re retired and you own a house that you would like to convey to your children after you are gone. You’d prefer not to have the house run through your estate, but you don’t want to transfer the property now, as you want to stay in your house for the rest of your life, if possible.
If you want the property to go to your children, one option is to re-title the property jointly, so that you are both named as co-owners. With joint ownership, legal title automatically transfers to any other joint owners upon your death (without the need for the intervention of the probate court). There may be tax consequences to this strategy, so you’ll want consult your tax advisor before doing so.
There’s another option, though—the creation of a life estate. With a life estate, you retain the right to possess and use the property during your lifetime, but it automatically transfers to that person or persons named as beneficiaries in the document that created the life estate. During your lifetime, you are considered the “life tenant,” and the contingent owners are referred to as “remaindermen.” While you are using the property, you typically cannot sell, give away, convey or cause damage or destruction to the property. When the property transfers (upon your death), it does so without going through the probate process.
As a life tenant, you typically have all the responsibilities of a property owner, including the obligation to pay the mortgage, to pay all taxes and insurance on the property, and to make any necessary repairs.
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we handle all types of insurance coverage disputes. Contact our office online or call us at 856-424-6400. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.