I have found the life estate an excellent way to avoid probate and keep the property out if the Medicaid process. Yes there are downsides as there are with trusts and wills. As the only heir of an elderly aunt it works for us.
she is presently in a NH but the house will not be sold until she passes. I find attorneys are not fond if this process however it is a simple inexpensive way to protect property from Medicaid liens
John, You hit the nail on the head. I'll add just a few more terrors to the life tenancy. 1. It may prevent the owner from executing an oil and gas lease unless all the remaindermen (those who will get the property after you are gone) because it can create a waste. 2. Even if you kids would never do what the golf course owners kid did, what happens if they become incompetent? They cannot give back or validate transactions. What if they die? Now their estate may have an interest. Often a better solution is a trust. Depending upon the situation an irrevocable asset protection trust can give the owner the flexibility to manage the property.
My experience with this was when we bought a parcel adjacent to us postKatrina. Property owner did deed with her & all 3 kids back after her hubs died. At act of sale 2 of the kids required that the proceeds be paid exactly 25% each and they kept their entire 25%. The fact that mom lost her home by Katrina & probably could really use some the $ was of no concern. Daughter was especially vocal that either done this way or she wasn't going to sign off. no love lost there.
Personally when it comes to passing down property I'm more a fan of doing a SCIN while they are still young but at the edge for actuarial tables to do one as it's done & changed. Medicaid probably can't get involved either as the note is defined & recorded legal.
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Exercise Caution When Considering a Life Estate Deed
she is presently in a NH but the house will not be sold until she passes. I find attorneys are not fond if this process however it is a simple inexpensive way to protect property from Medicaid liens
1. It may prevent the owner from executing an oil and gas lease unless all the remaindermen (those who will get the property after you are gone) because it can create a waste.
2. Even if you kids would never do what the golf course owners kid did, what happens if they become incompetent? They cannot give back or validate transactions. What if they die? Now their estate may have an interest.
Often a better solution is a trust. Depending upon the situation an irrevocable asset protection trust can give the owner the flexibility to manage the property.
Personally when it comes to passing down property I'm more a fan of doing a SCIN while they are still young but at the edge for actuarial tables to do one as it's done & changed. Medicaid probably can't get involved either as the note is defined & recorded legal.