A life estate is created when a homeowner transfers ownership of his or her home to children but reserves the right to remain in the home for the remainder of his or her lifetime.
With a life estate, the parent becomes the “life tenant” of the home, and the children are designated as “remaindermen.” Probate is avoided because ownership of the property transfers by deed to the remaindermen upon creation of the life estate, while the life tenant is still alive.
The life tenant still has responsibility for maintaining the property and making mortgage and property tax payments while still in the home, even though the parent and children are co-owners of the property. The children do not obtain sole ownership of the home until the life tenant dies; however, the ownership interests are still considered assets that could be attached by creditors for unpaid debts or awarded to an ex-spouse in a divorce.
If the life tenant decides to sell the home, he or she must obtain the permission of all remaindermen to do so or the children can return their interest in the home to the life tenant by consent. However, any remainderman can sell their interest in the property without the consent of the other owners.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.