Life Estate Deeds in Estate Planning
There are several common types of deeds in Florida including: the warranty deed, life estate deed, quit claim deed and special warranty deed. The most protective type of deed is the warranty deed. The special warranty provides very limited warranties (the seller warrants that he or she has done nothing to encumber the title to the property). The quitclaim deed provides no warranties.
There are also different present and future ownership interests that can be conveyed. Fee simple ownership has present and future ownership rights (the best ownership a person can have). Fee simple defeasible ownership is less common, but adds a contingency to the vesting of an individual’s rights to a property. The final ownership interest is the life estate and is used often in conjunction with estate planning. The deed reserves a lifetime ownership (present interest) to the grantor or other individual(s) and then the remainder (future interest) is deeded to another individual, entity or revocable living trust. A life estate for the life of someone other than the grantor is called a life estate pur autre vie (ie: if carol is given use of the family house for as long as her mother lives, she has possession of the house pur autre vie).
In order to preserve the remainder man’s interest’s, the life estate holder must follow certain rules. Specifically, the life estate holder cannot commit any type of waste during their life ownership. Waste is made in three different ways; voluntary, permissive or ameliorative. Voluntary waste is where the property is used in a manner in which reduces its market value. Permissive waste happens when a life estate holder fails to upkeep the property. Ameliorative waste is altering a property by making improvements. While ameliorative waste is not permitted, it usually will not be actionable since the damages are limited or do not even exist.
Revocable living trusts are often used with the life estate in estate planning. Specifically, the grantor reserves a life estate in the property (often primary home) and then gives the remainder interest to the revocable living trust (which is either already executed or created in conjunction with the deed). From there, your predetermined trust beneficiaries will obtain the rights to the property through the trust document.
Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.