How do I word a Life Estate bequest??

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Latest post 03-28-2007 3:36 PM by cody0797. 7 replies.
  • 03-28-2007 12:58 PM

    Question [=?] How do I word a Life Estate bequest??

    I am trying to help my Aunt draft up a Will.
    She wants to leave her new husband a life estate at her house, but when he dies she wants the house to go to me so that it stays on her side of the family. (The house is hers alone, bought by herself before she married) She doesn't want HER house to end of in the hands of her husbands nasty daughters.
    I was wondering what the proper wording would be for this situation. As I have it now, it reads...

    "to my husband XX, I bequeath a Life Estate in the real property located at 123 main st, city, whatever county, Tennesee. Upon his death said property shall go to my niece, xxxx and her heirs in fee simple."

    Is this adequate, or should it say her niece gets the "remainder interest" of said property??

    The husband is getting everything else and is happy with the Life estate arrangement.
    State is TN.

    Your input would be greatly appreciated. Thank you!!
  • 03-28-2007 1:15 PM In reply to

    re: How do I word a Life Estate bequest??

    Cody, you should be using a real estate attorney, as mentioned on the real estate board.

    If you are doing this for your aunt, it could come back to bite you (if you mess up), both civilly and by way of possibly being prosecuted for practicing law without a license.

    Please tell your aunt to spend a couple hundred dollars to see that her estate plan in this regard is carried out properly.
  • 03-28-2007 2:25 PM In reply to

    • Drew
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,585

    re: How do I word a Life Estate bequest??

    I think it is perfectly unsafe for you to write language into a will, ESPECIALLY with a potential adverserial situation in TN.

    Each state has its own quirks and while a life estate may seem simple--its NOT so when it comes to matters of the holder keeping up with taxes, utilities that run with land, maintenance or LACK of same, WASTE-like he moves out and his tribe of daughers move into trash the place etc, or he turns the heat off and all the pipes freeze --how do you as remainderman make sure his estate pays the costs back? (Especially if his buckert is empty.)

    Keep in mind that you Aunt has no duty under TN law to leave virtually everything to spouse--but the math of this may depend upon what portion the house represents of the whole. If the math comes out wrong its possible that Dad could be pressured by daughters to elect against the estate and defeat the life estate provision. Or worse, if Dad passes shortly after Mom his daughter could so elect on his behalf.

    If Aunt wants to provide for Hubby if she passes first but keep stuff away from his kids, as is her right, I think there are some other tools she needs to review with her counsel----QTip being one...

  • 03-28-2007 2:40 PM In reply to

    re: How do I word a Life Estate bequest??

    She got a lawyer and he completely screwed everything up. Things were contradictory and confusing. I am not writing her will freestyle. I was using Quicken Willmaker Plus 2007.
    I used the same program for my sister's will and she died not long ago.
    My drafting up a Will for my Aunt was for her to review and take to a lawyer for him/her to review and approve.
    If she died before her husband I would take care of paying the taxes/mortgage and he agreed to keep up with the maintenance and utilities. His daughters do not live with them.
    My Aunt is leaving me money to take care of these things.
    I have never heard of QTIP
  • 03-28-2007 2:56 PM In reply to

    • Drew
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,585

    re: How do I word a Life Estate bequest??

    It may or may not be wise for her to leave you money to take care of her estate. And unless things are properly drafted you may lose out on the tax deductibility of taxes and interest you so pay----

    A Q Tip, short for Qualified Terminable Interest Property has been around since about 1981-- It's simple form a trust wherein one could leave all the income for someor all ones estate to ones surving spouse but at the end, when that survivor also passes the funds go as Aunt or whomever designated earlier and NOT as survivor mightt otherwise decide--to HIS daughters. This is one very common way for somebody to provide for a new spouse but at end the stuff comes bad to original side---or anywhere the maker wants it to go

    AND a Q Tip done right perserves all the essential tax benefits of a spousal bequest.

  • 03-28-2007 3:36 PM In reply to

    re: How do I word a Life Estate bequest??

  • 03-29-2007 3:48 AM In reply to

    Feedback [*=*] re: How do I word a Life Estate bequest??

    “My drafting up a Will for my Aunt was for her to review and take to a lawyer for him/her to review and approve. ”

    It’s unforunate if the prior attorney she had did not do a good job. However, the best solution for that is for her to find a good attorney. I understand what you are trying to do, but if a client came to me with a will written by him/her (or a relative) using a consumer will prep program, I wouldn't use it. It would take me longer (and cost the client more) to try to modify that into a good will that would meet the client’s needs than to draft up a new will. Those will software programs can't address everything that a client may need, are not customized for the various customs and practices of every state, and may not offer some of the extras that may be available in a particular state that would make the will better. And, of course, the client won’t know everything that he or she should take into account when considering what to put into an estate plan. A good estate plan is comprehensive and includes more than just the will.

    “I have never heard of QTIP”

    A QTIP is a type a trust that is used for federal estate planning purposes. It is really only useful if a married couple (1) has a combined estate that would be subject to federal estate taxes and (2) they desire to impose restrictions on the surviving spouse’s ability to use the trust property. In other words, suppose a husband is concerned that his wife will not be able to manage money well and he wants to insulate her against losing her inheritance to bad financial decisions. The typical way to do that is to put her inheritance into a trust rather than give it to her outright. Using a trust allows him to define the circumstances under which she can distributions from the trust and he can select a trustee to manage the trust for her. The problem is that, in general, gifts to trust do not qualify as a gift to a spouse for federal estate taxes, which means that the gift would be subject to the estate tax. However, if the trust meets certain requirements, it will qualify as a gift to the spouse and thus will not be subject to the federal estate tax until she dies. Those trusts are called QTIP trusts.
  • 03-29-2007 3:54 AM In reply to

    Feedback [*=*] re: How do I word a Life Estate bequest??

    “Is this adequate...?”

    We cannot tell you if it’s adequate or what language you should use. Only an estate planning attorney in your Aunt’s state, in consultation with an attorney in TN where the property is located, can draft a proper will that will meet the requirements of both states. It may be that a life estate is not the best way for her to accomplish her objective here. A trust or other device might turn out to be better for what she needs. I really think she should find a good estate planning attorney to help her design her estate plan. There are number of issues, including taxes, that ought to be considered and unles you have experience with estate planning, you are likely to miss some important things.
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