ESTATE PLANNING

By Christopher W. Yugo

Nov. 1, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Q: How can I transfer the title to my home to my kids but keep the right to live there? Not that they would, but could they force me out?

A: When most people think of owning a home, they think of owning a fee simple interest in the property. A fee simple interest is the most complete ownership interest a person can own. A fee simple interest is essentially complete and total ownership.

However, you can own a lesser or partial interest in real estate. For example you might own an undivided interest with another person or people, or you could own an interest or right to the use of the property with the remainder interest owned by someone else.

An example of an ownership right that grants a person the right to use or occupy a parcel of real estate for a limited time is a life estate. A life estate is exactly what it sounds like, the exclusive right to use or occupy a parcel of real estate for a person's lifetime. A life estate may be what you are thinking of.

If you conveyed the title to your home to your children but retained a life estate interest, you could be assured that you would have the exclusive right to live there for your lifetime. Upon your death, your life estate would terminate and your children would be the sole owners of the home.

There are a couple of things you should be aware of before you convey the real estate. First, your children will own the remainder interest in your home. As such, they could sell it to someone else. I'm not sure who would be willing to by a home subject to a life estate, but it could happen.

On the other hand, your life estate also has value. As such, you could sell your life estate interest in the home. Again, I'm not sure who would be willing to buy your life estate interest, but it could be sold.

Also, because the life estate has value, it is considered an asset and its value would likely be included in an application for Medicaid. There is actually a table that attorneys and accountants use to value these types of interests.

Conveying a partial interest in real estate is a complicated matter. During law school, I lost a lot of sleep trying to understand the different interests that a person could own and how Professor Myers might pose a final question about them. I still get nightmares about them.

Before you proceed, I strongly urge you to talk to your attorney. You need to understand all of the benefits and risks associated with such a conveyance.

Opinions are solely the writer's. Christopher W. Yugo is a Crown Point attorney. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN, 46321 or to chrisyugolaw@gmail.com. Yugo's information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant or estate-planning specialist.

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