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  1. #1
    Join Date
    Nov 2006
    Posts
    6

    Default Life Estate Issues

    Hi,

    I'm co-executor with my brother administering our Mom's will. The first instruction in the will bequeaths to my brother her residence (New York), its furnishings and personal property to have and hold during his life. He is responsible for taxes, insurance and maintenance, but is not responsible for waste. Upon my brothers death the will states the house goes to me. The will does not attach any other contingencies or rights to my brother relative to the house and property so, for all practical purposes, this appears to be a straight forward Life Estate. My brother is the life tenant and I am the remainder man.

    The difficulty is that my brother first thought the house was his and he could sell it and buy a house of lesser value which would eventually revert to me. After some factual conversation, he now thinks he can decline the Life Estate, sell the house and split the proceeds with me. His justification is that the Life Estate was "not executed" and, as such, it does not exist making the house a part of the remainder of the estate and subject to equal distribution.

    Nothing in the will commingles the house and property with the assets that my Mom left my brother and me equally, so I do not think my brother is correct about how he wants to handle the house. Does the statement that the Life Estate was "not executed" make any sense? Can a life tenant refuse Life Tenancy and then claim half ownership of the house. If a Life Tenant declines his tenancy does the house immediately revert to the remainder man? What value does a Life Tenancy have?

    A bunch of questions, but any help would be appreciated.

    Thanks

  2. #2
    Join Date
    Sep 2005
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    Behind a Desk
    Posts
    98,846

    Default Re: Life estate Issues

    If he declines the life estate, as you have probably already been told, he is declining his interest in the home and it becomes yours.

  3. #3
    Join Date
    Nov 2006
    Posts
    6

    Default Re: Life estate Issues

    Is it that simple, or is there some sort of long term court process? What has compounded this problem is he is getting his input from the very attorney we are using to process Probate.

  4. #4
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Life estate Issues

    And that lawyer is telling him what? Perhaps you, he and the lawyer should have a joint meeting to clear up these issues.

  5. #5
    Join Date
    Nov 2006
    Posts
    6

    Default Re: Life Estate Issues

    Pretty much the issues I asked the questions about, when the Life Estate is created, if declined is house now is part of shared assets. I did have a heart-to-heart with the office and they are now doing their research... I think they had a paralegal or somebody trying to field the issue. They promised to run whatever they come up with past me first before sending copies to my brother, thats why I was trying to get things clear in my head.

    Reviewing a lot of other posts on this site and others has been invaluable. Certainly gave me the amunition to challange what my brother was saying.

    Thanks for this site and the help, it is appeciated!

  6. #6

    Default Re: Life Estate Issues

    What's the problem with selling the house and splitting the proceeds? Considering the problems with a life estate this may be the way to go.

  7. #7
    Join Date
    Nov 2006
    Posts
    6

    Default Re: Life Estate Issues

    Things get somewhat complicated... splitting the proceeds was not my Mom's intent. She was very specific about the house reverting to me or my issue for a number of family reasons. My understanding of NY law is that a Life Estate is a pretty strong arrangement and is difficult to undo without some compelling hardship reason. And, if it is undone the likely distribution would be to some type of a trust where part of the investment return would go to my brother during his lifetime and the principal would go to me or my kids.

  8. #8
    Join Date
    Sep 2005
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    Behind a Desk
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    98,846

    Default Re: Life Estate Issues

    Good point - I was more than a bit simplistic in my prior comment, rashly assuming that you were the two heirs to the estate. If he declines his share, it reverts to the estate and is distributed according to the estate plan. If this is a trust, then it could return to the trust as you describe - although you might be able to purchase the life estate from the trustee for fair market value.

  9. #9
    Join Date
    Nov 2006
    Posts
    6

    Default Re: Life Estate Issues

    Interesting you say if the Life Estate is declined, the assets revert to the estate for shared distribution. That's one of the key issues that has to be addressed. If my brother declines the Life Estate, from what you're saying, he would get half the house. Two issues come up, first, it was not my Mom's intent he get anything other than 'Use of the house" and, second, my future interest in the principal value of the house is compromised. If a Life Estate plays out as intended, my brother gets a place to live for his lifetime with responsibility for maintenance and expenses and after he dies I get the full appreciated value of the house without carring any expense. Selling the house and dividing it proceeds would significantly reduces the future value for me or my heirs. I believe that is the reason the first attempt to resolve these type conflicts by the court is place the proceeds of the asset in a trust- the trust would provide interest or dividend income to my brother to offset part of his alternative residence choice and preserve principal for appreciated growth for me. After his death, the asset reverts to me.

  10. #10
    Join Date
    Sep 2005
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    98,846

    Default Re: Life Estate Issues

    Quote Quoting Jennrica
    View Post
    If my brother declines the Life Estate, from what you're saying, he would get half the house.
    That's what he says. I must have missed the part where somebody agreed with him.

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