May 2, 2008
It is likely that your home is one of the single largest assets you own. As a means of attempting to protect that home from long term care expenses, while also avoiding probate, you may want to transfer it to one or more of your children. On its face, this appears to be a relatively simple and straight-forward transfer or conveyance. However, there are many issues that must be discussed and resolved prior to that transfer, to maximize your intent as well as maintain all income tax, estate tax and gift tax benefits to the greatest extent possible.
A life interest is merely a form of ownership where the person transferring the property, usually the parent, retains the right to use, occupy, enjoy the property and live in the residence. The transfer usually occurs to your children, who receive what is commonly known as a future interest in the property. This special form of "dual" ownership is not a joint ownership, nor will you have made a completed gift of your entire real estate to your children. However, you will not be able to sell, mortgage, refinance, or in any way encumber the property without the consent of your children. And likewise, your children may not transfer or sell the property without your signature.
The procedure to complete this transaction involves a deed from the grantor to the grantee, (from you to your kids,) which must be recorded with the appropriate Registry of Deeds. Once the recording of the deed is effective, your children own an interest in the property as well as you.
The additional benefits to this type of transaction are threefold. ...
You may read more at the link below.
by: Hyman G. Darling, Esq.