Delaware law allows a number of ways to leave real estate to loved ones after death. When conducting estate planning, all of the options should be explored in order to ensure that the transfer is accomplished in the best way possible, according to family circumstances. One of those options could be the use of a life estate.
A life estate is an arrangement that allows the property owner to transfer the property to someone with the provision that he or she remains on the property during life. The individual with the exclusive right to the property in this scenario is called the life tenant. The property must be maintained, including the payment of insurance and taxes during that person’s lifetime.
The remainderman is the one who receives the exclusive right to the property after the life tenant’s death. In addition, the property does not go through probate. Instead, it passes directly to the beneficiary. The beneficiary also receives certain tax advantages.
It should be noted that the life tenant cannot sell the property without the approval of the remainderman. Furthermore, Medicaid reserves the right to collect monies expended for the life tenant from the estate if the life estate was created after Aug. 2014. This could affect any inheritances a decedent left to heirs or beneficiaries.
A Delaware resident should carefully consider the advantages and disadvantages of a life estate. While it can be a viable part of an estate plan, it will not be the right choice for everyone. Individuals should consider all of the estate planning options prior to settling on one course of action. It would be beneficial to receive the input of an attorney who can outline the pros and cons of all of the available choices and help put together a plan that best accomplishes an individual’s goals and wishes.
Source: greenbaypressgazette.com, “Estate planning: Consider a life estate deed“, Carissa Giebel, Feb. 27, 2017