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Understanding life estates

On Behalf of | Mar 18, 2022 | Probate & Estate Planning |

Law students take whole courses in law school about the ways in which people can own property. There are many different ways which you might have heard about, such as “fee simple” or “in trust.”  One such method is by life estate, which basically means that the person owns the asset for the duration of his or her life. The distinction here is that only a person’s death changes the conditions of their estate. Life and death, as it relates to financial assets or real estate, causes a unique condition regarding ownership. Since no one possesses their assets indefinitely, devising a plan to transfer an estate can put your assets to good use when you die. An estate planning attorney in Pennsylvania can help outline your options.

Assign beneficiaries

Through a variety of instruments, estate owners have the right to assign persons or entities to receive their possessions after death. Your choice over who your beneficiaries are gives you a strategic advantage when transferring an estate. Without putting beneficiaries in place, the intestate law, overseen by a court, will decide on how to administer your assets. Allowing a the law and the court to decide your estate, however, could result in your assets going to places or people to whom you didn’t intend.

Shelter your assets from taxes

By specifying your assets within an estate plan, you might attempt to eliminate or reduce your estate and income taxes. Gifting a life estate to another person, or holding assets in an insurance package or within a trust is a way to avoid some taxes. You’ll then want to consider ways of reducing the taxation your beneficiaries will face. From start to finish, transferring your assets can be done tax-free, but there are many traps for the unwary.

Estate planning in Pennsylvania

By planning now, you give yourself the chance to set directives over your estate. Through a will, for example, you can make determinations regarding your possessions. Each case is unique and calls for a particular strategy. Ultimately, your goal is to transfer your wealth without taxes or loss.