Many estate planning tools exist for transferring assets to beneficiaries, including trusts, retirement plan beneficiary designations and last wills and testaments. These legal documents provide many options for bequeathing your assets to your children, spouse, friends, organizations or another entity. Inheritances in New Jersey often include houses, which can be passed down via an estate planning tool called a life estate.
Transferring homes to beneficiaries
The life estate is a little-known estate planning document used for transferring homeownership to someone. It gives you full use of the property, including the home, the land and everything attached to the land, until your death. Note that while “estate” is a term that refers to all the assets under a person’s or family’s ownership, “life estate” is a legal document.
Why choose a life estate over trusts or wills?
In estate planning, estate owners should avoid unclear instructions or relying on legal documentation that courts might not recognize as valid. For example, courts wouldn’t consider an email written to a beneficiary that promises them assets legally valid. In such cases, estates would enter the probate process, whereby courts help distribute assets. This often leads to asset distributions that don’t meet the estate owner’s desires.
Life estates avoid the need for probate. They’re also ideal for homeowners who don’t want to create wills or have no need for doing so. The property can remain in their possession until they die, and then it will pass seamlessly to the named owner.
Ultimately, estate owners have many legal documents available to structure the distribution of their assets upon death. Life estates are streamlined ways of transferring homeownership to a beneficiary.