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  1. #1
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    Mar 2019
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    Default Life Estate

    My question involves estate proceedings in the state of: Florida

    My father passed leaving a will. Aside from insurance policies he no longer had at death, he "bequeath(ed) the rest, residue & remainder of property, real, personal", etc., in fee, to his children. He "specifically, bequeath(ed) Life Estate in favor of" his ex wife whom he divorced in the 80's, but spent the past 17 years living with. Will further states, " She shall remain in sole possession of the home until she decides to move, is ordered to move by a court of competent jurisdiction or dies." She is up there in years living on a fixed income and cannot afford to maintain & live in the home and has decided to move. She will receive a sum of $ not mentioned in the will that was promised her. We have been advised to have a legal document drawn up showing an exchange of her rights to Life Estate for this $ and have her sign a quit claim deed giving us possession of the home. We're told to do the exchange now. Since she was left Life Estate in a will, is probate necessary to have her name put on the deed? Unsure how that is supposed to happen. She cannot quit claim deed of something she is not legally in possession of so the quit claim cannot be filed until then? Meaning it won't be vested until it is? Does assuming the property before her death change tax liability for the siblings regarding step up basis and capital gains? (Why?)

  2. #2
    Join Date
    Oct 2016
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    Default Re: Life Estate

    You don't want her name on the deed. A quitclaim deed doesn't have to transfer anything it is a renunciation of any claim.

  3. #3
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    Oct 2014
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    Default Re: Life Estate

    Quote Quoting Summr
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    Since she was left Life Estate in a will, is probate necessary to have her name put on the deed? Unsure how that is supposed to happen.
    No probate is needed just for her to quit claim her life estate interest to the kids. However, if the home is still titled solely in your father's name then probate will be needed at some point since only the estate personal representative can execute a deed to the place for the kids. So it is probably best just to open up probate and then you can take care of everything at once so that the kids become the sole owners of the home or so the estate can sell the home and give the kids the cash.

    Quote Quoting Summr
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    Does assuming the property before her death change tax liability for the siblings regarding step up basis and capital gains? (Why?)
    There would be no step up in basis if she died while holding the life estate. So there is no federal income tax benefit to wait until she dies to get her life estate interest.

    Quote Quoting PayrolGuy
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    You don't want her name on the deed. A quitclaim deed doesn't have to transfer anything it is a renunciation of any claim.
    That's not right. They do want her name as the grantor on the quit claim deed. A quit claim deed transfers to the grantee whatever interest the grantor has, if any, in the property. Here, the former step-mom apparently has a life estate. A quit claim deed would be effective in transferring that interest to the kids.

  4. #4
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    Default Re: Life Estate

    I mis-wrote I meant they don't want her added to the deed just so she can sign a quitclaim deed. I was responding to this question.

    She cannot quit claim deed of something she is not legally in possession of so the quit claim cannot be filed until then?

  5. #5
    Join Date
    Jul 2018
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    Default Re: Life Estate

    Quote Quoting Summr
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    She will receive a sum of $ not mentioned in the will that was promised her.
    Promised by whom?


    Quote Quoting Summr
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    We have been advised to have a legal document drawn up showing an exchange of her rights to Life Estate for this $ and have her sign a quit claim deed giving us possession of the home. We're told to do the exchange now.
    Advised by whom? Being told by whom? Why are you being advised/told these things? Is the money, in fact, something you are giving this woman in exchange for her moving out?


    Quote Quoting Summr
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    Since she was left Life Estate in a will, is probate necessary to have her name put on the deed?
    I'm not sure what "have her name put on the deed" means. You'd have to ask a Florida probate lawyer about the necessity of probate, but I assume it will be required to get title out of your father's name.


    Quote Quoting Summr
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    She cannot quit claim deed of something she is not legally in possession of so the quit claim cannot be filed until then?
    Despite your use of a question mark, this sentence isn't a question, but anyone can quitclaim anything to anyone. Indeed, quitclaim deeds are regularly used by persons who are not actually in possession of the property.


    Quote Quoting Summr
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    Meaning it won't be vested until it is?
    Huh?

    It really sounds like you should be consulting with a local probate attorney.

  6. #6
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    Mar 2019
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    Default Re: Life Estate

    The home is still titled solely in my Dad's name. We know we will have to take this to probate anyway since there is another small issue where probate cannot be avoided. There is virtually nothing else in this estate and there are no outstanding debts, creditors, etc. For those reasons we are hoping for summary probate. It is my understanding that there is no personal representative appointed by a judge (even though there is one named in the will) unless it is formal probate. So, if it makes it to summary and no one is appointed representative, is it safe to assume the title issue will be taken care of by the court?

    Confused about no step up basis if siblings waited for life tenant to pass. Whether the home is received before or after her death, siblings have been willed the home as an inheritance. If/when the home is sold, why wouldn't their be a stepped up basis rule applied if it's after the life tenants death? Will it apply after the quit claim is signed and filed and the home sold?

    There was a consult with an attorney. It was at his suggestion that an agreement be drawn stating the release of life estate to the remainder beneficiaries, releasing both parties of any claims, demands, liabilities, an exit date of the life tenant, etc., and that the $ be used in the agreement showing it as an exchange for the quit claim. That was not the intention of the promise made to her. The siblings were instructed (by my Dad) to provide a set $ amount if/when she decided to move to help her get back to her home state & family (where she has decided not to go). The siblings will honor that wish, but now it's been advised to make it part of a legal agreement. Is there any real benefit of this agreement? The original thought of the siblings was to provide the funds at the time of signing the quit claim to take place on the day she moves which she is aware of. She is not aware of a possible agreement that, with all it's legal jargon, may scare her.

  7. #7
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    Oct 2014
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    Default Re: Life Estate

    Quote Quoting Summr
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    It is my understanding that there is no personal representative appointed by a judge (even though there is one named in the will) unless it is formal probate. So, if it makes it to summary and no one is appointed representative, is it safe to assume the title issue will be taken care of by the court?
    The Florida statutes for summary administration indicate that you can have an estate personal representative, it's just not required. That suggests to me the person named as personal representative could still get the letters of administration from the court but still proceed to go with summary administration if all beneficiaries agree. The letters may be helpful when doing the deed transfers to ensure a good clean chain of title, which is what buyers will want to see. You might want to consult a Florida real estate attorney about that to ensure you get the transfers done correctly so that the deeds don't cause title companies to question the chain of title.

    Quote Quoting Summr
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    Confused about no step up basis if siblings waited for life tenant to pass. Whether the home is received before or after her death, siblings have been willed the home as an inheritance. If/when the home is sold, why wouldn't their be a stepped up basis rule applied if it's after the life tenants death? Will it apply after the quit claim is signed and filed and the home sold?
    The rule regarding life estates is that there is a basis step up when the life tenant dies if the life tenant is the one who created the life estate. But here, your father created the life estate, not his ex-wife (the life tenant). So when his ex-wife dies, there is no basis step up because she didn't create the life estate. What that means is that the basis in the property will be what the value of the property was when your father died, since the property did get a step up in value at that point, as adjusted for things like improvements, depreciation, etc., that you may have had for this property after your father died.

  8. #8
    Join Date
    Oct 2006
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    Default Re: Life Estate

    I would certainly add the lump sum that you are giving her in exchange for her giving up the life estate, to your basis.

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