Nashua, NH area client asks: Does a life estate make sense for my property?
When someone creates a life estate (the “grantor”), she devises a certain piece of real estate to someone for his life (the “life tenant”). Once he dies, ownership of the property either reverts back to the grantor, or goes to the future estate holder (the “remainderman”), depending upon the language that the grantor uses.
Life estates can help achieve the following goals:
- Avoid probate when the life estate holder dies;
- Allow the grantor to say what happens to the remainder—what happens to the property after the life estate holder dies; and
- Insulate real estate assets from creditors (particularly with regard to Medicaid).
When considering whether a life estate fits your needs, it is important to understand what the life tenant may do with the property during his lifetime, the limitations on what he may do, and the requirements he must follow in order to maintain the property.
- The life tenant can sell the property, but the interest in the property will only last for his life. The buyer must forfeit the property to the person or entity who is supposed to receive ownership after the life estate holder dies.
- The life tenant has a duty not to waste the property.
- The property must be maintained to a certain degree by the life estate holder. This includes the responsibility for paying taxes and insurance fees, as well as the responsibility to undertake necessary repairs.
The benefits and drawbacks of life estates as compared to other methods for conveying real estate should be considered carefully to ensure that you have all the information necessary to create an estate plan that works for you.
If you have real estate in New Hampshire and have been considering creating a life estate, if you have other real estate needs, our lawyers are ready to get the conversation started. Call (603) 883-0797
Author is Thomas J. Leonard
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.