[WSBAPT] Life estate?

[Eric Nelsen]

Did you get any responses? I find that a traditional life estate is typically not a good idea, and there are more structured ways to deal with it, typically by putting the interest in a trust or having the current owners execute a tenant in common agreement that addresses rights to partition, rights to occupancy, etc. The main reason I think that life estates aren't good is that they are very blunt instruments: the literal "life estate" at common law has specific features and as soon as you stray from those features, you basically need a trust document or some other detailed instrument to lay out what is and isn't like a life estate. I have litigated this more than once and I think a life estate leaves open too many issues and creates a lot of unnecessary opportunities for conflict between the surviving partner and the deceased partner's child.

If you want to talk further, please feel free to call.

Here's my list of notes/issues to think about when dealing with a house remaining with a surviving partner, but kids from a prior relationship are to inherit. These are all actual issues that have come up in litigation, usually because I wished that someone had done EP for the decedent to address them.

Will provisions for post-death occupant of house:

                gift is only a right to occupy and is conditioned on fulfilment of all conditions herein. right to occupy is not assignable and may not be shared except for casual overnight visiting guests.
                gift includes right to occupy without payment of rent during pendency of probate, but during pendency of probate the beneficiary must cooperate in allowing access to the property to the full extent the PR finds it necessary or convenient, at any time, upon 12 hours' oral or written notice or no notice in case of emergency.
                gift is not a life estate. the gift is intended solely as an accommodation to my partner to allow her/him to continue to live at the property where we lived together. my intent is for all value of the real property to pass to my residue heir subject only to this limited right to occupy which has no market value, for the full value of the property to be preserved for the residue heir, at occupant's expense during occupancy, and without any financial burden on my estate or residue heir during occupancy.
                right to occupy is not exclusive as against the estate (not residue heir) retains rights to enter and inspect to the same extent as a tenant-in-common, and estate may store tangible personal property that belonged to decedent at time of death until probate is closed.
                right to occupy belongs to partner only and may not be extended to any overnight guests for longer than seven (7) days out of any six (6) week period; provided, partner may have a paid in-home licensed and certified caregiver
                occupancy defined as: actually occupying the home on an overnight basis for at least five weeks out of every ten weeks [except winter snowbird? except up to 90 days if hospitalized or in convalescent care?].
                estate has a right to maintain exterior surveillance cameras and other equipment to keep house secure and monitored.
                must pay for reasonable maintenance and repair. scope of reasonable maintenance and repair includes without limitation maintaining roof secure from leaks; maintenance of exterior envelope against water leaks; repair or replacement of refrigerator, oven/range, washer/dryer, microwave; regular mowing and trimming of yard and curtilage; [etc.]
                must pay all property taxes when due.
                must pay all utilities when due.
                must pay for and maintain homeowner insurance for full replacement value of the house, naming residue heir as insured; shall cover for fire, and flooding if necessary, but not responsible for earthquake coverage; shall include inflation rider to maintain full coverage; occupant to select the company with residue heir's approval, which approval shall not be unreasonably withheld.
                residue heir has right to direct access to and communication with insurer
                must pay mortgage?
                if estate has insufficient other assets to pay all costs of administration and lawful claims against the estate, then estate may sell the house and substitute a gift to occupant calculated as $X per year by actuarial table of occupant's life.
                residue heir to have right to routinely inspect the property no more often than semi-annually upon 48' hrs notice to occupant, and additional right to enter at any time without notice in emergency to preserve property value
                residue heir right to receive annual accounting relating to payments, maintenance and repair
                notice of default and opportunity to cure, residue heir to have right to issue
                residue heir to have right to use unlawful detainer procedure for failure to meet requirements, award of atty fees to prevailing party

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Adrienne Keith Wills
Sent: Monday, July 27, 2020 1:13 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Life estate?

Hi Listmates,

I have a client who is in a relationship with an "SO" (significant other") but they are not married.  They will be closing on a home purchase next month and I believe they'll be taking title as tenants in common.  The client has two adult daughters.

The client is considering an estate plan in which the SO would receive a life estate for the client's 50% interest in the home.  (The SO would also have her own 50% interest.)  The thinking is that the client ultimately wants his adult daughters to inherit his share, however he wants the SO to be able to remain in the house during her life.

What advice/cautions/experience can you share re: life estates?  Would mortgaging the property be a challenge in the future, given the SO's combination of interests?  FWIW, the client and I had also discussed a trust as an alternative to a life estate.

Thanks in advance!  Adrienne

--
Adrienne Keith Wills, Attorney | Mediator
Wills Law Firm Inc. (please note the new name for my practice)
Helping family law and estate planning clients create their legacy

1700 Seventh Ave, Suite 2100 | Seattle, WA  98101
Web:  www.WillsLawFirm.com<http://www.willslawfirm.com/> | Tel. (206) 523-3047<tel:%28206%29%20523-3047> | Fax (206) 219-6714

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