One essential part of estate planning is to determine how your assets will be distributed when you pass away. Depending on the people you want to assign as beneficiaries or the type of property you want to leave to family members, a life state could be an important part of planning your final affairs. If you live in California, here are some important things you should know about how a life state can fit into your estate planning.
What is a life estate?
A life estate is an estate planning method that legally establishes ownership rights. A life state will also offer tax benefits and will make it easier for your property and assets to be distributed to your loved ones. A life estate is real estate, usually residential. The owner of the life estate can live in the property until they pass away.
Once the estate owner dies, their heirs will become the owners of the property and avoid probate. This allows a family home to easily be passed down to relatives when the homeowner has passed on.
Involved parties in a life estate
There are two main parties involved in the estate planning process for life estates.
The life tenant in a life state is the estate holder that resides in the property until they pass away.
The remainderman is the person who is the beneficiary and will take full ownership of the property when the life tenant dies.
Life Estate Deeds
A life estate deed is a legally binding document that a real estate attorney can draw up for a family. The deed creates a type of joint ownership. As the life tenant, you’ll maintain control of the property throughout your life if you prefer. Once you pass away, the property will automatically be transfer to the beneficiary of your choice.