There are a plethora of reasons someone engaged in estate planning might want to establish a life estate interest in a plot of real estate in Virginia. But the requests we most often get from clients to do so are related to either aiding elders to maintain a place of residence when on Medicaid, or when someone wants to allow a descendent to live on the property or otherwise benefit from it while ensuring the property will pass to someone else after that descendent dies. Life estates are usually passed on via will, utilizing specific language to invoke the law.
When the goal is to achieve long-term care without having the property seized, a good deal of advance planning is necessary, since Medicaid looks back a number of years to see if property interests have been exchanged—and if so, it will be assumed the exchange occurred in order to keep Medicaid from laying claim to that property, which will mean long-term care is not available to the elder for a period of years. (This would leave them without ownership to the property and without long-term care Medicaid services! The worst of outcomes.) Moreover, this is a regime on shaky ground, since it is not settled law.
When might someone want to permit their loved one to have a life estate interest in the property while requiring that the property later pass to someone else? There are a few somewhat common reasons (among situations in which life estates are invoked, that is, which are actually fairly rare in general). Imagine, for example, that one has a child who has become dissolute—in the throes of seemingly intractable addiction, for example, which they have shown total willingness to sell everything they own in order to gratify. That child, though, has a child of their own, one’s grandchild, whom one would like the family home to pass to someday. One can ensure that the child has a place to live for the rest of their life—without their being able to sell it out from under their own feet unless the grandchild or their legal spokesperson agrees—and that, once they die (or pass the “remainder” to the grandchild while still living), the grandchild will gain fee simple ownership to the property, to do with as they please. This same sort of scenario can play out where a charity, rather than a descendant, is given the “remainder” to be assumed after the passing of the person with the life estate interest.
The best way to set up a life estate interest, given the complexity and terms of art involved in establishing them, is to talk to an attorney, who can help to craft a proper will.
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If you want to plan such a future for your estate, attend one of Promise Law’s free estate planning workshops. These workshops provide a great foundation of information that everyone needs to be able to make good planning decisions. Moreover, if you attend a workshop you also get a complimentary one-on-one consultation with one of our attorneys.