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HOW TO PROTECT YOUR HOME FOR PARTNER AND BENEFICIARIES THROUGH A LIFE ESTATE

Texas law does not provide domestic partners or significant others the same home protection rights as a surviving spouse. If you are married, your surviving spouse has a right to live in the homestead of the deceased spouse for the remainder of the surviving spouse’s lifetime – even if the surviving spouse was not named as a beneficiary of the will of the deceased spouse or if the deceased spouse had failed to have a will and had children from a prior relationship. The right to occupy, possess, and use a property for the remainder of one’s life (provided the user of the property takes care of the taxes, insurance, maintenance, repairs, mortgage, and any other costs) is called a life estate. A failure to pay such costs or maintain the property could result in the remainderman (typically the children of the deceased) having the life tenant removed from the home. These actions are most typically brought when the deceased had children from a prior relationship. As a result, if you want to make sure your significant other/partner is not only able to live in your home if you die or become disabled and also be able to provide for the upkeep and costs of the home, then your planning should provide for funds so that the partner could continue to live there if the partner could not afford to do so with their own funds.

Life estates can be given in a will, trust or deed. Upon the death of the life estate tenant (your significant other/partner), the property would go to your remainder beneficiary (typically children) as set forth in your plan.

There is a problem if you deed a life estate interest to your significant other and then your relationship becomes rocky or ends. The only way (assuming you had mental capacity, were not under duress, or being unduly influenced) to get the life estate interest back would require the life estate owner (the significant other/partner) to deed the life estate interest back to you. As a result, it is usually best to use a will or trust (and trust is better if you want to give the significant other/partner the right to live there should you become mentally incompetent or incapacitated and need to move from the home since a will is only effective after you die and trust is effective immediately). You can always change your will or trust during your lifetime (assuming you have mental capacity).

Also, sometimes conditions (besides paying all costs) are desired by the grantor of a life estate in a will or trust. For example, would it bother you if your significant other/partner had a new significant other/partner living in your home while you lacked mental capacity (and no longer live at home) or after your death? Sometimes grantors of the life estate do not want the life estate tenant to rent the home if their desire is to just give their significant other/partner the home to live (and not to profit from) for the remainder of their life.

Finally, life estate planning can be used in many other ways other than protecting your significant other/partner. For example, often grantors retain a life estate in a deed to avoid probate or to avoid a successful claim for Medicaid estate recovery (if the grantor is receiving Medicaid or anticipates receiving Medicaid for long-term care where the government has a right to make a claim against the home after the death of the Medicaid recipient to the extent that Medicaid benefits have been advanced, then it is common to use an enhanced life estate deed commonly known as a Ladybird deed).

As in any estate planning, life estates are just a tool in the toolbox that can be used to accomplish the goals of some.

If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming virtual Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation. 

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