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A life estate deed can be thought of as a will solely for a particular property. A Life Estate deed provides that the owner of the property ("Life Tenant") owns the property during the Life Tenant's lifetime. The Remainderman named in the life estate deed becomes the owner of the property upon the death of the Life Tenant. Life Tenants and Remainderman can include multiple parties.
A life estate can be "With Powers" or "Without Powers". The life estate deed states whether or not the Life Tenant has "Powers" and if so what those powers are. Deeds "With Powers" are generally written to allow the Life Tenant to have full control over the property. This would include the right to sell, mortgage, and even change the Remainderman. The Remainderman has no control over the property. This is very similar to a will for the property. Effectively, the Life Tenant has 100% control of the property. Only upon the death of the Life Tenant, does the Remainderman have any ownership of the property.
Deeds "Without Powers" generally are written to allow the Life Tenant merely to have ownership of the property during the Life Tenant's lifetime. The Life Tenant would not be able to sell or mortgage the Remainderman's interest, nor change the Remainderman. The Remainderman has no control over the property until the death of the Life Tenant. Only upon the death of the Life Tenant, does the Remainderman gain control of the property. Since the Life Tenant does not have ownership of the remainder, any interest of Life Tenant creditors ceases upon the death of the Life Tenant. These deeds can be an effective estate planning tool.
Life Estate Deeds can be very cost effective estate planning tools and often help avoid having to go through the probate process. Upon the death of the Life Tenant, the property named in the life estate deed passes automatically directly to the Remainderman outside of the estate of the Life Tenant. Therefore, notwithstanding any provisions in the Life Tenant's will that might provide that the the decedents estate passes to a particular person, the life estate deed will control who receives that particular property. This is true even if the will provides that the particular property is left to someone other than the Remainderman named in the life estate deed. Effectively, the life estate deed trumps the will.
Upon the death of the life tenant, the property automatically vests in the remainderman owner. No new deeds are required. It would be prudent to contact the taxing authorities and utility companies, to update them with the Remainderman's name and mailing address.
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