life tenancy

[frank]

I was doing some planning for the future and one of the things my lawyer suggested for my homestead was life tenancy with my son. I have most of my assets set up to avoid probate, but this was something I had never heard of. has anyone here used this method and what were the pros and cons? thanks in advance.

frank

 

[VanWinkle]

Interesting idea and I found this on Legal Zoom:


https://www.legalzoom.com/articles/...al document that changes,in this example, Son).

Appears to be a way to bypass probate, but does have some drawbacks.

VW

 

[pb4uski]

We are lucky to have properties in Vermont and Florida, which are two of 6 states that allow for enhanced life estate deeds, aka Lady Bird deeds and we have executed and recorded ELE deeds for both of properties. Effectively the ELE deed is similar to having beneficiary designations on financial accounts, but for real estate.

DW and I are joint owners of the property and can use it, rent it, and importantly, sell it and keep the proceeds, or whatever as long as we are alive. If one of us dies, then the same thing, e surviving spouse can use it, rent it, sell it and keep the proceeds, or whatever as long as they are alive. When the second of us dies, the property is owned by our heirs, DS and DD, without going through probate.

The ELE deed differs from a life estate deed that isn't enhanced. With a regular life estate deed if you want to sell the property and keep the proceeds you may need the consent of the remainderman/heir, so be careful with life estate deeds.

YMMV.

 

[street]

Interesting idea and I found this on Legal Zoom:


https://www.legalzoom.com/articles/...al document that changes,in this example, Son).

Appears to be a way to bypass probate, but does have some drawbacks.

VW

Thanks for the informational link. I need to get things taken care of in more detailed legal description at some time. This life tenancy route looks like what I want to happen. Something quick and prepared for easy legal transfer when that time comes.

 

[OldShooter]

What effect does this have on basis step-up?

 

[pb4uski]

None.

 

[MarieIG]

What effect does this have on basis step-up?

I suspect, but don't know, that this acts as a "gift" as opposed to the transfer via death, so one would keep the grantor's basis. The value of the "gift" would be less than if the property were gifted outright due to the lifetime tenancy.

 

[MarieIG]

I was doing some planning for the future and one of the things my lawyer suggested for my homestead was life tenancy with my son. I have most of my assets set up to avoid probate, but this was something I had never heard of. has anyone here used this method and what were the pros and cons? thanks in advance.

frank

Have not used it, but have thought of leaving my father's house to my son, with DH having a lifetime tenancy.

The cons - you no longer own/ or have complete control over the property; there is a possibility of disagreements of what to do with the property at a future time. The consent of both parties is needed to sell. (Issue raised by Old Shooter. Does your son loose a step up in basis.)

Pros - makes it very difficult for you to be kicked to the curb. I don't know this - you can ask your attorney - but explore how Medicaid views a lifetime tenancy. I suspect it won't be a problem, but you will need to confirm that.

 

[njhowie]

I was doing some planning for the future and one of the things my lawyer suggested for my homestead was life tenancy with my son. I have most of my assets set up to avoid probate, but this was something I had never heard of. has anyone here used this method and what were the pros and cons? thanks in advance.

frank

Mom did this with her condo, adding me and sis through life tenancy probably 15 years ago - this added us on to the title. Me and sis also have durable power of attorney. When it came time to sell a few months back, I had absolutely no issues doing it all by myself; between the life tenancy and the durable power of attorney it was breeze easy. I was able to sign everything, mom and sis weren't involved whatsoever...other than proceeds being wired directly into mom's checking account. I assume sis would have equally been able to do it all on her own.

 

[Stormy Kromer]

I'm no lawyer.

That disclosed I have an example that scares me.

I had an old farmer friend that wanted to make sure the nursing home didn't get his farm. So, he gave his son his farm and reserved life estate in the property. That way the nursing home wouldn't get his hard earned farm.

His son's wife got tired of living on the farm and divorces the son. She got half the farm and the old fellow died in the nursing home anyway. Broke.

Not to be a downer on the party here, but if you give something away....it's not yours anymore.

 

[jim584672]

Avoiding Probate is how to avoid a Medicaid clawback in NY. Setting up a Life Estate Deed to transfer the property at death avoids Probate.

 

[frank]

does the medicaid clawback apply with a life tenancy? and if not why not draw it up and record it when the time for the need is imminent?

 

[jim584672]

does the medicaid clawback apply with a life tenancy? and if not why not draw it up and record it when the time for the need is imminent?

I don't know if the 60 month look back applies to a Life Estate Deed change.

 

[pb4uski]

does the medicaid clawback apply with a life tenancy? and if not why not draw it up and record it when the time for the need is imminent?

The weblink suggest no because the property is not part of the estate subject to probate.

https://burnerlaw.com/how-does-medicaid-deal-with-a-life-estate/

... With a life estate created in a deed or trust, Medicaid does not have a claim against your estate for monies that it paid for services rendered. The property avoids probate, as it is no longer an estate asset that passes through the court. In this scenario, Medicaid will have to seek reimbursement from other probate estate assets or recover nothing at all. ...

 

[ncbill]

I'm no lawyer.

That disclosed I have an example that scares me.

I had an old farmer friend that wanted to make sure the nursing home didn't get his farm. So, he gave his son his farm and reserved life estate in the property. That way the nursing home wouldn't get his hard earned farm.

His son's wife got tired of living on the farm and divorces the son. She got half the farm and the old fellow died in the nursing home anyway. Broke.

Not to be a downer on the party here, but if you give something away....it's not yours anymore.

Sounds more like the old farmer gifted the farm outright to his kid.

Like the name implies, a life tenancy means the giver gets to stay for their lifetime no matter what, as long as the below get paid.

Often the giver remains responsible for all maintenance & taxes while they're still living there as well.

Normally the kid's spouse would be granted a 50% interest but would have to wait until after the old man dies & it gets sold.

If there is some specific state statute that does allow a sale to be forced, well, using an irrevocable trust domiciled out-of-state to establish the life tenancy gets around that...at additional expense, of course.

That approach would also be useful in states that impose estate tax on children but not gift tax, e.g. Pennsylvania IIRC.