When a home is transferred with a retained life estate, the person making the transfer retains the right to live in the home during his or her lifetime. He or she continues to pay the taxes and maintain the property. Any tax exemptions thus remain with him or her as the life tenant. As…

What happens to property after a life estate deed is filed?

After the Life Estate Deed is filed, the life tenant and the remainder beneficiaries own the property, but have different possession rights. The life tenant continues to possess the property during his or her lifetime, and the right to possess the property passes to the remainder beneficiaries when the life tenant dies.

When to use a reserved life estate deed?

Demystifying the Deed. A deed with a reserved life estate is used when you wish to both pass your real property to someone upon your death and also protect the property from nursing-home liens.

What’s the name of the enhanced life estate deed?

Enhanced Life Estate (Lady Bird) Deed – Recognized in only a handful of states, the lady bird deed “enhances” the traditional life estate deed by giving the life tenant the power to revoke the deed or transfer the property to other owners without involving the remainder beneficiaries.

What happens when parents transfer property to children?

If the parents transfer the property during the parents’ lifetime without remaining on the title as a joint owner, then the children receive the property with the same tax basis that the parents had in the property.

What happens to the property in a life estate?

The deed includes a provision stating that the parents “retain the right to use and occupy the property during their lifetimes,” a so-called “life estate” in the property. Upon the death of the parents, the life estate ceases to exist and the children own the property free and clear of any lien for long-term care costs.

Can a parent force a child to sell a life estate?

However, when the parents have retained a life estate, the creditors of a child cannot force the sale of the property to satisfy a child’s debt. That is because a child’s creditors are not in any better position than the child. Since the child could not sell the property and force the parents out of the property, neither could a child’s creditor.