While every person in Maryland should have a will or trust, there are some scenarios where a life estate deed can provide some additional benefits. These considerations make life estate deeds an attractive option for certain situations. Of course, your estate planning attorney can make the best recommendation for your situation, but in this article, we will provide a summary of why someone might choose a life estate deed in Maryland versus, or in addition to, a will or trust.
Avoiding Probate
A life estate deed allows for the direct transfer of property upon the life tenant’s death, bypassing the probate process. This can save time, money, and potential disputes among beneficiaries. In addition, the probate process can be time-consuming and expose you or your loved ones to additional taxes. There are several legal instruments that can be used to avoid probate. Your estate planning attorney can help you determine the best option for your situation.
Preserving Lifetime Use and Residence
With a life estate deed, the property owner retains the right to live in and use the property for their lifetime. This provides the owner with security, control, and the ability to enjoy their property without interference from beneficiaries. This can be very comforting to a person who wants to age in place and feel secure that they will preserve the home for their use. It also provides and easy way to pass the property on to heirs.
Medicaid Eligibility Protection
Transferring property through a life estate deed can help protect it from Medicaid estate recovery process. This can be particularly important for individuals concerned about long-term care costs and preserving assets for their heirs while still qualifying for Medicaid.
Control over Property Distribution
A life estate deed allows property owners to have greater control over how their property is distributed after their passing. They can designate specific remainder beneficiaries who will become the owners of the property upon their death, ensuring their wishes are followed.
Potential Tax Benefits of a Life Estate Deed in Maryland
Depending on the jurisdiction, a life estate deed may offer tax advantages. By retaining a life estate interest, the property’s value for estate tax purposes may be reduced, potentially resulting in tax savings for the remainder beneficiaries.
It’s important to note that the suitability of a life estate deed versus a will or trust depends on individual circumstances and goals. Consulting with an experienced attorney specializing in estate planning is essential to determine the best approach for one’s specific situation.
While a life estate deed offers unique benefits, it may not be suitable for everyone. Factors such as the complexity of the estate, the need for more comprehensive estate planning, or specific family dynamics may require the use of a will or trust. Working closely with an estate planning attorney ensures that all options are explored, and the most appropriate estate planning strategy is implemented to achieve one’s objectives. Bear in mind, that many attorneys can do life estate deeds, but often without full consideration for the estate planning benefits or options. So, we encourage you to seek the advice of our estate planning attorneys. We will provide you with either a life estate deed or an estate plan, depending on what’s best for you! Contact us today to schedule a private consultation.