When you hear about the fact that most people have not executed any type of estate plan, it is disturbing to say the least. There are so many different sets of circumstances that could present themselves, and there is an appropriate reaction to each of them.
Those who take the right steps are ideally prepared. The many who do nothing oftentimes suffer the consequences, and their families may also pay a significant price.
There are many different legal devices that can be utilized to serve various different purposes. We would like to briefly look at the device called a life estate here.
To provide a simple explanation, with a life estate you give someone the right to property for the rest of his or her life. This person would be called the life tenant.
When you are creating the life estate, you also include what is called a “remainderman.” This person would assume ownership of the property after the death of the life tenant.
Let’s say that you are a parent and you get divorced and then remarry. For the purposes of this hypothetical example, you want your son to inherit your home eventually. However, you also want your surviving spouse to be able to live in the property for the rest of his or her life after you die.
You could make your spouse the life tenant and your son the remainderman, and both of your objectives would be realized.
There is also an elder law application. If you were anticipating the need for Medi-Cal benefits to pay for long-term care, making yourself a life tenant in your own home as you name your children as the remaindermen could be a wise choice.