Life Estates

Life Estate:

A life estate is when ownership in land is split into two parts. The first part is the Life Estate which is owned by the “Life Tenant” who is entitled to possession and enjoyment of the property as long as he or she is alive. The second is the remainder interest which belongs to the “Remainderman” who receives title to the property after the Life Tenant dies.unsplash time watch

Advantages: The Life Tenant is not immediately subject to the liens or claims of the remainderman. In other words, the Life Tenant cannot be interrupted in her occupancy of the property.  There is no probated needed for the property in a life estate assuming that the person who is to get the property outlives the person granting the interest.

Disadvantages: The Life Tenant cannot sell or mortgage the property unless the Remainderman agrees. Financial or divorce problems of the remainderman may prevent the transaction. The Life Tenant may also be prevented from leasing the property or developing the mineral interests without the remainderman’s consent.

Medicaid and VA:  For Medicaid purposes the transfer may be seen as a transfer for less than fair market value if nothing is paid.  This may result in the imposition of a penalty period that would disqualify the owner from receiving benefits.  In VA Wartime Veteran Pension (Aid & Attendance) the entire value of the property may be considered when an application for pension is submitted.