A life estate is a legal arrangement between two parties that allows one party to use the property of the other while they are alive. It’s similar to a trust, except that the beneficiary doesn’t necessarily have any control over the money or property during their lifetime. A person may want to set up a life estate for asset protection or to ensure loved ones inherit an asset after their death.
What is a life estate?
A life estate is a legal agreement that gives you the right to use someone else’s property during your lifetime. You can sell, lease or transfer the property at any time during your lifetime. A life estate can be set up for any type of property including real estate, vehicles and business interests. This is a great way to protect assets from lawsuits or creditors by giving someone else control over them until after death when they will pass on to beneficiaries designated in an irrevocable trust.*
Why would you want to set up a life estate?
Life estates are useful for asset protection in several ways. For example, they can protect your assets from creditors. If you set up a life estate, your beneficiary won’t be able to access the property until you pass away. This means that anyone who wants to sue them will have no way of getting their hands on the money and property until it’s too late for them to do anything about it–by which point, they may have lost interest in pursuing legal action against your beneficiaries because of lack of funds or time constraints (or both).
Life estates also provide some protection from estate taxes; if an heir inherits property that has been placed into a trust or held under another legal arrangement prior to death, then there are no taxes due on those assets at all! In addition, setting up this type of trust can help avoid probate costs as well as any time frame involved with getting through probate court proceedings before being able apply these funds towards any number things such as paying off debts or investing further into other ventures that could potentially yield higher returns than simply sitting around waiting until after passing away so someone else can use them instead.”
How to set up a life estate
To set up a life estate, you will need to transfer ownership of your assets to the life tenant. This can be done through a deed or will. The first step is choosing who will receive your assets and how much control they will have over them once they are transferred.
The next step is ensuring that this person has no ability to sell or transfer the asset in any way after it has been transferred into their name as owner (called full title). In order for this method to work properly, it’s important that all control over these assets be removed from both parties involved: The person who created them (you) and also whoever takes possession of them when they pass away (your successor).
The third thing you must do if setting up an estate plan with multiple beneficiaries involves setting up trusts so that funds go directly into those accounts rather than being dispersed among beneficiaries’ bank accounts immediately after death occurs.”
A life estate can be a good way to protect your assets in some situations.
Life estates are a good way to protect assets from creditors and other claimants. A life estate is a right to use and enjoy property for the rest of your life, with the remainder going to someone else after your death. For example, if you sell your home but want to keep living in it until you die, then you can create a life estate that gives someone else (such as your children) rights over the property while they live there.
Life estates may also be useful in other situations where there are concerns about asset protection:
- If a person has substantial debts or liabilities outside of probate (for example credit card debt), he can transfer some or all of his assets into an irrevocable trust with himself as beneficiary for his lifetime only; this would prevent creditors from accessing those funds when he dies because they won’t become part of his estate during probate proceedings.* When divorcing couples have children from previous marriages who are entitled under state law (or common law) both parents’ estates must go through probate court before being distributed among heirs.* If one spouse dies without leaving behind any will at all–and especially if she dies intestate within two years after marriage–then her husband/wife becomes administrator over her entire estate including real property like homes which means all decisions must be made by him/her alone without input
A life estate is a way to protect your assets, but it’s not the only way. If you have an estate worth more than $5 million, then setting up a trust may be a better option.