Real Estate Life Trusts
July 27th, 2009 by adminA life estate is true to its name. It is an estate in land that endures for the life of its owner. A life estate is defined by California Civil Code Section 766 as an estate during the life of a third person. Parents may deed property to their children, subject to the parents exclusive right to use and enjoy the property during their lifetimes. A life estate is a contract right that is exclusive to the person who holds it — it has no market value, since it can't be sold or transferred to anyone else. Once your mother is no longer able to live at home, the life estate “asset” — the right to live in the house — will have no value.
A life estate is usually created by deed but can be created by a lease. No special language is required provided the grantor's intent to create such an estate is clear. A life estate is a limited property interest. Title to the property is transferred, but the transferor or other designated person (the life tenant) retains for a specified period of time the right to use, enjoy, and receive income from the property transferred. A life estate is an interest in a property for the life of the person that receives it. The life estate does not transfer to another person.
A life estate is very simple, since there is no trustee and no extra income tax returns to be filed. However, a life estate does not offer all of the protections against creditors that a spendthrift trust does; and in the case of intangible personal property, failing to use a trust could result in a dissipation of the principal by the life tenant. A life estate is essentially a trust with a special provision for the house itself. In it the couple can spell out exactly who gets to live in the house, for how long and who gets it after both spouses die. A life estate is completed by executing and recording a Deed. Unlike many charitable planning tools, this is a relatively simple transaction for the donors.
From The Desk Of Paul B. of Discount Properties of Arizona Thank You for taking the time to read my article of information. If you would like more information related to this article PLEASE CLICK ON THIS LINK www.discountpropertiesofarizona.com/
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