Using a Life Estate Deed in Estate Planning How does a Life Estate Deed work? Well, essentially the current owner of the property signs a special deed form over to another person, the "future owner", with specific language added to the Life Estate Deed, indicating that the current owner is reserving for him or herself, a "life estate" in and to the property for the duration of the current owner's life. The original copy of the Life Estate Deed is then recorded in the public records in a manner similar to other real property deeds. The current owner typically continues to have complete control of the property, paying all taxes, maintenance fees, and upkeep on the property as they had done prior to the transfer. Once the current owner dies, the future owner can take immediate possession of the subject real property without the need for any additional deeds, nor the necessity of probate. Thus, a Life Estate Deed can be used to create a simple and easy turnover of real property upon the death of the life estate owner.
A substantial advantage of a Life Estate Deed vs. a Will is the likely avoidance of probate, which will typically be required if the property is transferred by way of a Will.
One of the traditional drawbacks of using a Life Estate Deed has been that, should the current owner decide to sell or transfer the property, it would require the written consent of the future owner to do so. Fortunately, with the emergence of the Modified Life Estate Deed, that drawback has been eliminated. It is now possible to make a grant of a Life Estate Deed, also sometimes referred to as a "Lady Bird Deed", and retain the right to sell, transfer, and mortgage the real property without the consent of the future owner. In addition, under this newer modified version, the current owner can reserve the right to cancel the life estate at any time, and for any reason, or even no reason at all. So, for example, having executed and recorded a Modified Life Estate Deed would not necessarily prevent you from selling the house, if you decided to enter into a sale before death. A substantial advantage of a Life Estate Deed vs. a Will is the likely avoidance of probate, which will typically be required if the property is transferred by way of a Will. Is a LIfe Estate Deed Right for You? Under the right circumstances, a Life Estate Deed can be a very effective part of your estate planning. Like most other estate planning documents, the proper form and execution of a Life Estate Deed is of the utmost importance. Improperly prepared, executed, or recorded, it is very unlikely to accomplish your planning goals, and will almost certainly lead to prolonged and expensive legal battles. This is why it is so very important to seek out the services of an experienced Estate Planning lawyer to assist you with all of your legal estate planning needs.