Reserving a Life Estate

It is a near universal sentiment that doing something now, is better than doing something later. This thought is few places more pronounced than in the world of estate planning. Here, people want to see the fruits of their labor, and feel assured that those fruits will pass smoothly to the next generation. That’s why they call me. Unfortunately, estate planning can often feel anticlimactic in this regard. In a common estate plan, we do little more than identify important decisions, plan for them, and memorialize the desired outcome. We typically reserve the actual doing part until another day, usually a day after death when the children are in charge. As a respected judge once said, this process can often provide less satisfaction then kissing one’s sister. A clear exception to this norm is the immediate creation of a life estate.

A life estate is an interest in property than exists only during the life of the owner, and no further. A future interest is created in the heirs. In this way, a client can deed property to their heirs (often their children) today but retain the right to undisturbed use and possess the property for the entirety of their life (i.e. a life estate), and thus be able to stay in the home and live as the true owner. After death, the entire property vests in whomever the deed identified.  With a life estate reservation, we can get something done immediately (by signing the deed, and acknowledging the transfer) which usually provides satisfaction to the client. There, for all to see in black and white, the transfer has been made.

While there are several important considerations, tax and others, to be made when thinking about a life estate, it can sometimes be the best option for an estate planning client.

-Evan Jones, Attorney