Georgia residents in the thick of estate planning are probably familiar with the term “life estate.” It refers to any property that you’d own and use for the entirety of your life that’s jointly owned with someone else.
The person who owns the property – the life tenant – will stay there for the remainder of their days. When they eventually pass, it would transfer to the other person listed in the life estate.
What pieces of property can be considered for life estates?
Life estates are mostly used in reference to homes, but it can also refer to other types of property. Life insurance property, retirement accounts, cars – all can hypothetically be put a life estate.
Regardless of the property type, life estates come with certain terms and conditions. The life tenant can’t sell the property without the agreement of the other owner in the estate – known as the remainderman.
If you do sell the property, the remainderman has the right to ask for part of the proceeds. A special type of life estate must be created in order to get around this.
You’ll need to create a life estate deed with the help of an attorney and the person you intend to be your remainderman. From there, you must file the deed with the county court.
Pros and cons of a life estate
There are some downsides to a life estate. The home isn’t considered an asset of your estate if you put it into a life estate, and it also makes the life tenant liable for legal issues that the remainderman might get into.
Many people look into creating life estates to easily transfer large pieces of property, such as the family home, without it having to go through probate. A living trust or a transfer-on-death deed can also accomplish this same thing. It’s important to thoroughly research all of your options before making a decision.