What are the pros and cons of having a life estate agreement for a parent who may have to enter a nursing home?

ConsA life estate can make it hard to sell property. There is the German who bought a rent controlled apartment from an old lady subject to a life estate. She has lived to be over 100 and he still hasn't gotten the apartment!

If the property is left vacant, often the case when an aged parent goes into a nursing home, it tends to get run down and is not maintained well, reducing the resale value.

Reserving a life estate allows the owner to sell the property, retain the right to use it for life and avoid it being part of their probate estate when they die. This could reduce the estate's taxable value. It also provides cash for the individual to pay for a nursing home or other needs.

Being conveyed property by a parent who retains a life estate in property means that you have a fee interest in the property, while your parent is living, and the title will vest fully in your name when your parent dies. It also gives your parent rights to the use and possession of the property while he/she is living.

The parties should discuss the situation with an attorney who can review the situation, explain the options and the consequences.

The life estate can be drafted by an attorney so that in the event the parent can no longer live on the premises the life estate is extinguished. Any instrument that affects the title to real property should be drafted by an attorney who specializes in that area of law. Any deed or life estate can be made subject to certain conditions. Seek professional advice.