A life estate is a signed document that gives you the absolute right to live in a piece of property until you die. If you (the grantor) are planning to transfer the deed on your home to a friend or relative (the grantee) as part of your estate planning, consider using a life estate to protect your use of the home for your lifetime. After one spouse dies, the life estate will protect the other spouse's use of the home. At the time of the second spouse's death, the property transfers in full to the grantee, giving that person full legal rights to occupy, rent or sell the home.
Consult with a tax professional. Transfer of property and the use of a life estate have complicated tax implications. It can affect your eligibility for Medicare and may also alter the amount of property taxes that you owe. Additionally, the property will be considered a gift and will be subject to relevant taxes.
Draft a quitclaim deed to transfer the property to the grantee. Have the document drafted by an attorney or use a reputable company to obtain a standard quitclaim deed.
Designate the grantor and grantee. Include a full description of the property, including the plat number and the physical address. The description also should include the square footage of the home and the number of rooms.
Retain a life estate. After listing the property description, add verbiage that indicates that you will be retaining a life estate. A life estate will allow you and your spouse the legal right to live in the property until death. Including a life estate means that you will be responsible for property tax and maintenance of the property.
Sign the quitclaim deed in front of a notary public. Both you and your spouse will need to sign the document if you are joint owners of the property.
Have the quitclaim deed delivered to the grantee. The document is not considered official until a copy has been given to the grantee.
Record the deed with the courts. Officially recording the deed will protect the grantee in the event of later disputes. There may be a small fee for processing the recording.
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