WHY YOU NEED TO MAKE A LIFESTATE NOW IN UPSTATE NY
During their lifetime, people acquire many assets. These assets often include real property such as houses and land. They also may have a large amount of cash in savings accounts and CD’s, as well as stocks and bonds. If a person becomes ill and cannot provide for him or herself, they may need to be placed in an assisted living program. As often discussed in the news, these programs and facilities are not cheap to say the least and if a person can’t afford them outright, their assets are often used up in no time at all and the remainder of the costs are then subsidized by the government. Something like this could easily be avoided if a person plans ahead.
Once this happens, one of the best ways to avoid giving up rights to one’s assets is to set up a Life Estate in their real property.
A Life Estate is defined as an estate held only for the duration of a specified person’s life. With a Life Estate, the individual has full rights and privileges to the property, as if they owned it outright. They can remain on the property or will have rights thereof to it so long as they live. Once this individual dies, said property will revert to the holder of the remainder interest, such as the property in question. The “holder of the remainder interest” is typically the life tenant’s child, children, or some other trusted family member or friend.
Put in practical terms, the Life Estate allows an individual to keep their property without sacrificing the freedom to be medically cared for in the future.
For example, if somebody has a house or summer home that they want their children to ultimately inherit, the best way to ensure that this happens is to set up a Life Estate, with a reversionary interest going to the named children. Typical language would look like “To Walter for life, remainder to Jim, Judy, and Lisa.” In this scenario, Walter would have all rights and privileges to said property for the duration of his life. Upon his death, the property or “remainder interest” would be then transferred to Jim, Judy and Lisa in equal shares. By having this Life Estate, Walter would be immune to the property being taken from him in terms of equity if needed to pay for medical services an/or assisted living services in the future.
Currently, in New York State, there is a 5-year “look back” period for which a person is subject to. If a property transfer such as this is attempted within this look back period, the “equitable immunity” so to speak will not apply. For this very reason, it is imperative that an individual take advantage of the Life Estate well in advance and not procrastinate until the onset of illness.
As one approaches their “Golden Years,” it is important that they think about protecting the assets they worked all their lives for. Before it’s too late, seriously consider the option of a Life Estate.
(Picture Credit: http://www.newsday.com)