Retained Life Estate Agreement

Retained Life Estate Agreement

A Retained Life Estate Agreement is a legal arrangement in which an individual (the grantor) transfers ownership of a property to another party (the remainderman) while retaining the right to occupy and use the property for the duration of their life. This type of agreement allows the grantor to maintain control and enjoyment of the property during their lifetime while facilitating a future transfer of the property to the remainderman upon the grantor’s death.

In this arrangement, the grantor retains a "life estate," which provides them with the right to live in and utilize the property as they see fit. This can include the right to rent, mortgage, or sell the property, although any sale would typically need to consider the rights of the remainderman. Upon the death of the grantor, the life estate automatically terminates, and full ownership of the property transfers to the remainderman without the need for probate.

For example, an elderly homeowner might enter into a Retained Life Estate Agreement with their child. The homeowner transfers the title of the house to the child while reserving the right to live in the house for the rest of their life. This setup not only allows the homeowner to remain in their home but can also assist in estate planning by potentially avoiding probate and reducing estate taxes.

Overall, a Retained Life Estate Agreement can be an effective tool for estate planning, helping to secure the grantor’s living situation while ensuring a smooth transition of property ownership after their passing.