Whether you are looking for ways to minimize probate costs or you have concerns about Medicaid eligibility, you may be considering transferring your home to a loved one.
However, you may not be ready to give up your home just yet. A life estate deed allows you to transfer future ownership of your home to another individual/s while retaining current ownership until your death.
Minimize probate complications
A life estate deed establishes the legal transfer of the property after your death. This means that your home may not need to pass through the court before transferring to the new owner. In addition to minimizing expenses, fees and tax liabilities, this may help to avoid delays and conflicts related to the probate process.
Avoid Medicaid penalties
Because your home may not be subject to probate, a life estate deed may help to protect it against a Medicaid-related lien. While a deed transfer with a life estate may create a period of ineligibility for benefits due to excess assets, the look-back window may be shorter than if you made an outright gift.
Rest assured in your ownership
Under a life estate deed, you are responsible for paying taxes and other expenses related to your home during your life and you may continue to use the property as you wish. You may continue using the house as your primary residence, or you may use it as a source of rental income.
While a life estate deed can be a useful financial planning tool, there are potential disadvantages. For instance, you may need the future owner’s signature to sell, mortgage or refinance your home. Before committing to a deed transfer, make sure you explore all your estate planning options.