LIFE ESTATE DEEDS
Protect Your Home With A Life Estate Deed
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All our clients have different and unique needs when it comes to real estate. To ensure our clients
receive the best service, we take a personal approach to provide our clients with the best options to
meet their needs. One of the assets that is important for most of our clients to protect is their home.
Your home is not only the place you live, but is also an asset that you have worked hard throughout your
life for. One way in which you can protect your home and pass it on to your loved ones is through a life
estate deed.
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Life Estate Deeds
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Many homeowners who are preparing their estate may think of transferring their home to their children
to avoid probate or protect it from nursing home costs. Unfortunately, if this transfer is done
improperly, you or your children may not achieve the benefits you hoped for. With a life estate deed,
you will be transferring the future ownership of the residence to your child, while retaining the current
ownership for yourself. Therefore, you will be responsible for owning the property and paying for all the
expenses, including taxes for the remainder of your life. At that point, your children will take over
ownership and responsibility for the expenses.
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Benefits Of A Life Estate Deed
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A life estate deed has many benefits and can be the best choice for those looking to pass their home to
their family with as little hassle as possible. Some of the benefits that you will find with a life estate deed
are that:
You Will Have The Security Of Living In Your Home
Unlike transferring your home before you pass, you will still be considered the owner and will have the
right to stay in the home as long as you choose without the risk of being removed. While you will need
the future holder’s signature to refinance or mortgage the property, they will not be allowed to sell
without your knowledge and participation.
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You Can Avoid Probate And The Cost Associated With It
Since the future owner has already been established, and the transfer for the deed will become
complete with your passing, the house will not go into probate, and your loved ones will not have to pay
the expenses and fees associated with it.
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You Can Avoid A Lien On Your Home For Medicaid
When you transfer your home by gift, The five-year lookback period for Medicaid begins to run and may
trigger a penalty period during which you may be ineligible for Medicaid benefits. If done correctly, you
will be able to have Medicaid pay for the care you need, such as nursing home care, and your home will
be protected for your heirs. Gifting the property with a retained life estate will generate a shorter
penalty period than an outright gift of the property, and will still serve to protect against Medicaid
reaching this asset to satisfy their lien.
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Your Heirs Will Receive An Income Tax Advantage
Under current tax law, if you gift your property with a retained life estate then the people you gave it to
will receive a “step up” in their basis in the property to its value on the date of your death. Since the
home-sale exclusion is often not available to your donees, and the property may have increased in value
during your ownership, this approach can mean a significant capital gains tax savings for your heirs.
Is A Life Estate Deed The Best Option For You?
Life estate deeds are not the best option for everyone. There can be some drawbacks to life estate
deeds, such as more difficulty selling after the life estate deed is in place or wanting to change your
estate in the future, so it is important to talk to a qualified lawyer to help decide if a life estate deed will
be the best option for you and your estate.