What Is a Life Estate?
A life estate is a form of property ownership that divides control and ownership between two parties during the property owner’s lifetime. The individual who establishes the life estate is called the “life tenant,” while the person designated to inherit the property is known as the “remainderman.”
How Life Estates Work
During the life tenant’s lifetime, they maintain full control of the property with one significant restriction: they cannot sell or encumber the property without consent from the remainderman. Upon the life tenant’s death, the remainderman automatically inherits the property and avoids the probate process entirely. The heir only needs to provide a death certificate to the county clerk to assume complete ownership. This arrangement serves as an automatic property transfer mechanism that bypasses court involvement.
Benefits for Estate Planning
Life estates represent a popular estate planning strategy that offers several advantages. Most notably, they enable property to pass directly to designated heirs without court proceedings, streamlining the inheritance process and reducing administrative burden.
Medicaid Planning Considerations
Life estates can provide meaningful benefits for individuals concerned about long-term care costs. When someone applies for Medicaid to help cover nursing home expenses or home healthcare, the government examines their assets over a five-year look-back period. A home that is actively owned could jeopardize eligibility for benefits.
However, if a life estate deed was established more than five years before a Medicaid application, the property transfer would not count against the applicant’s eligibility. This timing consideration allows elderly property owners to preserve homeownership while potentially qualifying for needed government assistance.
For specific guidance on life estates and Medicaid planning, consulting with an attorney specializing in elder law is advisable.
If you or a loved one needs assistance with elder law, probate or estate planning issues, do not hesitate to contact us. We are here to help.
