What Happens to My Life Estate Upon My Mother’s Death?
My parents gave me a life estate on the property in which my house sits. My father has passed away but my mother is still living. I have my house paid for now. Should I have the life estate taken off the deed and get my mother to give me just a straight deed? I have a brother and I’m wondering if, upon my mother’s passing, won’t my house go back into the estate and give my brother some authority or interest in my home?
You describe an unusual situation. A life estate is a form of shared ownership of real estate in which one person—the life estate owner—has the right to use the property during her life (or more than one person has such rights while any of them is alive) and others—the remaindermen—have ownership after the life estate owner’s (or owners’) death. Typically, parents keep life estates while giving the remainder interest to their children so that when the parents pass away, the property will pass to the children without going through probate. This way, the parents also retain total control of the property during their lives, with the exception that they can’t sell or mortgage the property without the cooperation of the children. This can also have some Medicaid planning benefits.
Your case is the opposite. You have the total right of possession during your life and the property reverts to your mother upon your death. As you suggest, if she dies before you, it will revert to her estate in which your brother would have a one-half interest. Now, you can’t sell or mortgage the property without your mother’s cooperation. After her death, you would need your brother’s cooperation and upon a sale, a small portion of the proceeds would pass to your brother. If your brother were to pass away before you, things could get even more complicated with his one-half remainder interest owned by his heirs.
So, yes, it would be cleaner if your mother either gave you her interest in the property now or did so through her will when she passes away. The real questions are, however, whether your mother wants the property to ultimately pass equally to your family and your brother’s after her death or whether she wants you to be able to sell or mortgage the property. Depending on her wishes, a transfer of her interest to you may or may not be appropriate. A trust might also clarify some of these possible scenarios.