Another thing to consider is whether your father may need to apply for Medicaid. A life estate is a common way to shield a house from Medicaid claims, as long as the life estate can be established at least 5 years before a Medicaid application. Removing the house from the life estate to sell it would give your father assets that Medicaid could claim.
When the life estate was established, that was a gift to you of some percentage of the house's FMV (and should have been reported on a gift tax return even though no tax would be due if the amount of the gift was less than the estate tax exclusion). I'm not sure what the legal process is to sell the house. Can you just tear up the life estate agreement and pretend it never happened? Probably not because of the gift. Does your portion of the house's value go up over time? Probably -- the "remaindermen's" interest does go up as the holder of the life estate age.
When the life estate was established, that was a gift to you of some percentage of the house's FMV (and should have been reported on a gift tax return even though no tax would be due if the amount of the gift was less than the estate tax exclusion). I'm not sure what the legal process is to sell the house. Can you just tear up the life estate agreement and pretend it never happened? Probably not because of the gift. Does your portion of the house's value go up over time? Probably -- the "remaindermen's" interest does go up as the holder of the life estate age.
Statistics: Posted by w5000 — Mon Mar 03, 2025 11:12 pm