How Can Remainder Interest Be Changed from Joint Tenants to Tenants in Common?
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Question:
In an attempt to find solutions to bypass probate, my husband and I set up a life estate in 2011. Both of our children are the remaindermen, and they hold title as joint tenants on the deed. At the time, neither was married or had children. When I revisited this life estate deed, it occurred to me that our children probably should have taken title as tenants in common, since they both are now married each with children. Should we worry about the way it is as recorded? Can we and should we change the way they hold title to tenants in common WITHOUT requiring a new deed thus preventing the 5-yr look-back from starting over? If so, how is that accomplished?
Response:
You can’t change your children’s ownership interest in the property because you gave up control over their remainder interest when you transferred it to them back in 2011. But your children can do so simply by executing a new deed changing their ownership interest from joint tenants to tenants in common. This would have nothing to do with the life estate interest you and your husband hold so it would not start a new five-year look-back period for Medicaid.
As you appear to understand, if the property remains titled as it is now and one of your children were to pass away, their interest would pass to their sibling as the joint tenant. If it’s changed to tenants in common then if one of them were to pass away their interest would pass to their estate to be distributed as the direct in their will, presumably to their spouses and children.
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