Transferring Real Estate To Heirs Through A Life Estate Deed In New York
A common real estate conundrum involves how to maintain real estate during your lifetime while effectively passing it to your heirs after you pass on. Typically, this is done through a will that devises your home to an heir or set of beneficiaries. However, this necessarily involves the probate process and can delay the final transfer of a property for several months while administration of the estate unfolds.
One useful method to circumvent probate and create a “best of both worlds” scenario is through the use of a life estate deed. Under a life estate, two or more people maintain an ownership interest in property, for different durations.
A life estate includes two categories of owners at the same time:
- The Life Tenant. This person maintains full possession of the property during their lifetime. This includes the right to remain in the residence, collect rent and profits, make improvements, and maintain the property. The life tenant uses and operates the property as if they are the sole owner in many regards.
- The Remainder Owner. This owner (or owners) have no legal right to use or reside at the property, or collect rent or income from the property during the life tenant’s lifetime. At the same time they are not responsible for taxes, maintenance, insurance, or other associated costs while the life tenant uses the property.
Upon the Life Tenant’s death, the property automatically passes to the Remainder Owner in the Life Estate. There is no need for passing the home through probate, thus avoiding the legal and administrative costs associated with the traditional transfer of property through a will. Instead of waiting through a months-long probate process, Remainder Owners simply update the Deed.
Additional Benefits of a Life Estate Deed in New York
Another useful benefit of the life estate is that, while the Life Tenant remains alive and in use of the property, they still qualify for STAR exemptions, tax reductions, and other benefits available to a legal owner of property.
Perhaps most importantly, by reserving a life estate, the Life Tenant does not have to worry about moving out of their home unless there is some medical need to do so.
Life estates are smart estate planning tools in many situations, as they can help you maintain the real estate you currently own, while efficiently passing it on to your family later. For example, parents can retain full and complete possession of their home during their lives, while easily passing it to their children and avoiding certain tax pitfalls and Medicaid lien issues.
The overall benefit in creating a life estate might vary somewhat depending on your circumstances. Real estate and estate-planning decisions are always fact sensitive, and come with crucial financial and tax implications as well. You want to discuss all available options with a New York real estate law firm that has decades of experience in these matters.
Our Bronx & New Rochelle Real Estate Attorneys Can Discuss Life Estate Advantages and Disadvantages With You Today
Real estate decisions are always complicated and for good reason. Our Bronx & New Rochelle real estate lawyers at Cavallo & Cavallo can help you simplify the process and explain what your best options are for your unique situation. Contact us today for help.