According to FindLaw and other sources, probate can take anywhere from nine to 24 months to complete, so it is no surprise that people try to find faster methods to have their loved ones inherit from them. If you want a relative to take ownership of your home as quickly as possible, you might consider a life estate.
A life estate conveys your residence to someone else without the need for probate. This estate planning tool may meet your priorities, but it does present possible drawbacks.
How a life estate works
A life estate is a legal arrangement that allows a homeowner to share ownership of a property with someone else. The homeowner, as the life tenant, maintains full control and use of the home as long as the tenant lives. The other person is the remainderman, who receives ownership of the home after the tenant has died.
Creating a life estate involves filing a special deed, called a life estate deed. This document names the life tenant and remainderman. It establishes that the tenant is the owner for life, but will pass the ownership interest to the remainderman following the death of the tenant.
The positives of using a life estate
Without the need for probate, establishing a life estate allows you to save time and legal costs compared to using a will. Additionally, a life estate guarantees you a place to live since the deed specifies your lifetime rights over your property. It also provides certainty that your chosen heir will eventually inherit the home.
Downsides of a life estate
Part of the problem with a life estate is that the life tenant cannot sell the home or take out loans without permission from the remainderman. You give up certain amounts of control over the residence due to the arrangement. It is usually not possible to change or revoke a life estate without consent from both parties.
In addition, a life estate does not protect a remainderman from debt. Creditors can place liens on the home. Finally, if the remainderman dies before the tenant, the ownership share passes to the heirs of the remainderman. This development means the tenant loses control over the eventual recipient of the home.
Life estates allow homeowners to guarantee eventual inheritance of their property while still living on it. However, the inability to change course down the road may necessitate further estate planning to add protections.