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People who plan and want to provide their heirs with a good life, think about the division of property after their death. That is most often done by those who have many real estates. Making a will is a logical solution, but the problem with it is that this document is easy to refute.
While there may be various things in the will, from facilities to child custody, there is a particular public document that allows people to regulate the division of the real estate solely. It is called deed and serves to regulate interest among potential heirs to the lives of property owners.
Below read about the differences between deeds and wills, although both are kinds of transferring the ownership: https://www.sapling.com/6516541/difference-between-wills-deeds.
Here’s a common situation – a father wants one of his sons to inherit the house. He does not want to draw up a will because there would be a chance for the other son to defeat it, invoking inheritance rights. He also does not want to burden the heir with a life support contract, which can be a considerable expense.
So, the father will make a deed, and, in legal terms, become a grantor. Also, he is a life tenant because he is an actual owner of the real estate that is the subject of this estate-planning tool. Having a deed implies having certain rights and benefits to the real estate that are the subjects of this document.
By signing a life estate deed, the rights and obligations of the heirs are regulated; at the same time, the life tenant does not lose the privilege to use and manage the property while alive. It also means that the owner has all regular obligations, such as paying taxes, renovation responsibilities, necessary real estate repairs, etc.
This division of ownership means that inheritors (named in the deed system as remaindermen) have the right to be part of negotiations or agreement when it comes to the sale of the property, mortgage, or any proceeds from it. It’s a form of co-ownership. If you want to get professional help, you can check here for more information.
Purpose of Life Estate Deed
Heirs don’t possess the entire real estate as long as the person holding the ownership is alive. After he passes away, remaindermen become owners. They just have to wait for the execution of the deed process.
A deed is executed by automatism because it requires no testimony and legal guarantees of validity. This document is not the last wish of the one who made it and does not represent the division of property that will be made after the legator’s death. He already made that division during his lifetime, and that cannot be refuted later.
So, the father decided to leave the house to one son. The second son, after the death of the father, has no legal right to dispute this decision. A different situation would be if the father wrote a will with the same conditions. Thus, the law considers the subject of a deed as a gift to the heir. There is no need for testimonials and additional court proceedings.
Benefits of Deed
People who own a lot of properties generally think in advance about the division of their property after their death. A way of transferring real estate ownership through a deed is often the best solution when owners want to avoid the costs and complications of probate. Thus, the subject of this document will be a ‘clean’ property without any burden.
Also, those who wish to ensure the existence of their marriage partner while alive will opt for a deed rather than a will. They can title anyone as the future owner of the estate, but the spouse has the right to a lifetime enjoyment. It is only after their death that the ownership passes to the heirs.
After you deed your real estate to someone, you may become eligible for long-term care by a government assistance program known as Medicaid. By making this document, you become a co-owner of the property. Your assets now do not exceed the required value, and you become qualified for government help.
Solving Debt Issues
Deeding your property to heirs can be a good move if your financial situation is complicated. People in their late years, especially if they are in poor health, may have problems with unpaid hospital bills, creditors’ claims, etc.
Adding another owner to the real estate, you will minimize the risk of selling the property or part of it to settle your creditors after you die. Remaindermen won’t have to pay for your debts. Given the potential for abuse, the law may place a ban on deeding in suspicious property transfers.
Deed Risks and Issues
You will probably need a legal counsel if you think of a life estate deed. You should know that making this document is not always possible. A lawyer will certainly tell you all the benefits of this estate-planning tool, but it is also advisable to inquire about potential risks.
As soon as your property gets another owner, your control over it decreases. Although this will probably be someone you know and trust, they can sell their share in your property at any time. Or real estate can become a subject of heirs’ proceeding (divorce, bankruptcy), in order to repay their debts. So, you can get a complete stranger for the heir, who will have the same rights as you.
Also, co-ownership means that you have to get the heirs’ permission for anything you want to do with the real estate. It applies to the entire property that is the subject of the deed. The sale, pledging because of mortgage and even renovation of the property will not be possible without the consent of all owners.
While making a life estate deed is a transaction that property owners want to do out of the best of intentions, there is always a chance of abuse. That is why the law representatives must give proper consideration to the owner’s financial situation before allowing the change of ownership of the property.