While creating a life estate can be a valuable tool as you set up your estate plan, this decision should not be made lightly. Like any other estate planning tool, there are both advantages and disadvantages to this technique. An experienced attorney can help you determine whether a life estate is right for you.
Cons of Life Estates in Your Estate Planning
When your attorney explains to you the advantages and disadvantages of using a life estate, he will discuss the following cons:
- Once the property is deeded away, the life tenant must work with the remainderman in order to do anything with it. For example, the life tenant cannot sell the property unless the remainderman agrees.
- Issues can sometimes arise between the life tenant and the remainderman. California state law addresses how the expenses related to the property should be apportioned between the life tenant and the remainderman. The life tenant may run into issues if he or she cannot afford to pay the expenses that he or she is responsible for.
- The life tenant has an obligation to maintain the property for the remainderman. Issues can arise if the life tenant cannot afford to do so.
- Assigning a value to life estate interests can sometimes be tricky. After you pass, your estate administrators will have to enlist the help of a CPA and other legal professionals to come up with a value.
- Typically, once a property is deeded away and a life estate reserved, the action is not reversible. If needs or goals change down the line, the life estate may prove to have been a disappointing choice at the time the estate plan was created.
Life estates are right for some families while not for others. We can help you make this difficult choice. We encourage you to view our client testimonials page today to learn more about how we have helped many other clients create effective estate plans.