[WSBAPT] Real Property Bequest Subject to Life Estate

Tue Apr 12 14:35:01 PDT 2022

Thanks, Eric (and Phil).  Are the executor and trustee typically the same person?  (I realize they can be different people but anticipate that this PC will want them to be one in the same.  Since the executor is not a beneficiary of the real property, I don’t see any issue – am I missing anything?)

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Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131
www.fordhamlegal.com<http://www.fordhamlegal.com>

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From: <wsbapt-bounces at lists.wsbarppt.com> on behalf of Eric Nelsen <eric at sayrelawoffices.com>
Reply-To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Date: Tuesday, April 12, 2022 at 2:28 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Real Property Bequest Subject to Life Estate

In my experience, a true “life estate,” as in the old-fashioned defeasible fee, is seldom a good idea because it leaves all kinds of potential issues unresolved as to rights and duties of the owner and the remainder interest. Better to put the property in an express testamentary trust so that terms can be elaborated.

Typically when a layperson says “life estate” they’re basically talking about a desire to give the beneficiary the right to live in the house rent-free. But who pays mortgage, taxes, insurance, repairs, maintenance? What happens if the beneficiary neglects the property and it starts to badly degrade? What if someone else moves in with them? Can the beneficiary rent the property out?

Here’s my laundry list of problems I identified in course of litigating some years back (in relation to a surviving domestic partner being allowed to live at the house after decedent’s death), and thinking about how EP could minimize potential issues:

Will provisions for a 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>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Inge Fordham
Sent: Tuesday, April 12, 2022 2:02 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Real Property Bequest Subject to Life Estate

Upon his death, PC wants to leave his real property to his step-son subject to a life estate in his sister.  What’s the best way to go about this?  Just include a bequest to the stepson, subject to a life estate in sister, in the last will and testament?  Is there such thing as a TOD deed to John Doe subject to a life estate in Sarah Appleseed?

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Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131
www.fordhamlegal.com<http://www.fordhamlegal.com>

Confidential Communication: This email is sent to a recipient on behalf of an attorney/law firm, and is information intended exclusively for the individual, entity or company to which it is sent.  This communication may contain proprietary, privileged or confidential information or may otherwise be legally exempt from disclosure other than to the intended recipient.  If you are not the named addressee, you are not authorized to read, print, retain, copy or otherwise disseminate this message or any part of it.  If you have received this email in error, please notify the sender immediately by email or other communication and delete all copies of the message.
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