[WSBARP] Transfer of remainder interest.

[RebeccaWiess]

One warning on life estates - if there is Medicaid involved, now or later,
the State may have issues with a transferred remainder interest. This is not
a treatise on the topic, just a notice to proceed carefully in this area. 

 

 

Rebecca K. Wiess

421 24th Avenue East

Seattle, WA  98112

Phone 206 329-6638

rwiess at foxinternet.net 

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From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Craig Gourley
Sent: Tuesday, January 22, 2019 10:25 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Transfer of remainder interest.

 

Thanks Dwight, you have confirmed my presumptions. 

Get Outlook <https://aka.ms/ghei36>  for Android

 

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com>
on behalf of Bickel, Dwight <Dwight.Bickel at fntg.com>
Sent: Tuesday, January 22, 2019 10:08:43 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Transfer of remainder interest. 

 

We have to start with definitions. The remainder interest in property is the
rights of possession after expiration of someone else's life estate. The
usual severance is by deed from A, owner of the fee estate, to A for life
then to B.  A holds the life estate, and upon its expiration A has no
interest in the land. Upon A's death, B becomes the fee owner without
limitation. 

 

Your question was the ability to transfer the remainder estate. In that
scenario, the remainder estate is the rights held by B during the life of A.
No possession rights, but a presently vested right to the full ownership at
the death of A. That severed estate in the title can be conveyed by B to an
LLC during A's life without affecting the severed estates in any way,
neither the life estate or the remainder interest.

 

Of course an LLC cannot hold a life estate; only a natural person has a life
that can be the basis of a life estate. But an LLC can hold ownership of
that severed title to A's life estate. It is called a life estate pur autre
vie <https://www.merriam-webster.com/legal/pur%20autre%20vie> . During A's
life, that existing life estate can be transferred to another person, or to
an LLC, without affecting the life estate or the remainder interest. The LLC
holds the possession during the lifetime of A. Upon A's death, that estate
is extinguished and B owns the full fee estate.

 

Call if you have any questions. Title companies are familiar with this and
can provide title insurance upon a severed estate without joinder of the
other interest. I provided a mortgage title policy for $300,000 granted by
life estate borrower without joinder. The bank understood that its mortgage
ceased upon the death of its borrower and was relying upon alternative
credit.

 

Dwight A. Bickel

Regional Counsel

Fidelity National Title Group

701 - 5th Avenue, Suite 2700

Seattle, WA 98104
Phone: (206) 370-3189

E-mail:  <mailto:Dwight.Bickel at fntg.com> Dwight.Bickel at fntg.com

 

Behalf Of Craig Gourley

Listmates,  During the holidays I posted a query but don't recall any
responses, or maybe I just don't recall them!  Client wants to transfer
their remainder interest in a life estate to an LLC.  I can't think of a
reason why not but have never done it before.  Anyone think of a reason why
this cannot or should not be done?   Thanks!!  Craig 

 

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