BLENDED FAMILY SOLUTIONS
BLENDED FAMILIES
When a will maker wishes to cater for the needs of the current partner and also those of the children of current and former relationships, one possible solution is to create a Life Estate for the current partner.
LIFE ESTATES
One option when a will-maker is not rich and their major asset is a house, is to give the partner a Life Interest in the house. This is not an absolute gift as there is a provision that the property will later pass to the children. This may keep the children happy as they know they will get something eventually. One big disadvantage is that the partner may live to a ripe old age and so the children may wait a very long time before they inherit
LIFE ESTATE WITH CONTINGENCY/CONDITIONS
A life interest may have limitations placed on it, for example the life interest will end if the partner remarries or s/he leaves the property permanently. If the condition is breached the life tenant will lose ownership of the land and the property returns to the deceased estate to be distributed in accordance with the will.
LIFE ESTATE NO CONTINGENCY/CONDITIONS
A life interest in a property provides a person a propriety right to occupy the property until they die or leave the property permanently.
The life estate will be registered with the Land Titles Office and the life tenant then has the right to occupy and use the property.
The new owner, or person who will inherit after the life estate ends, has an interest in the house or land, but he or she has no right of occupying the property. This also means he or she cannot sell it, rent it or alter it until the life tenant dies or leaves permanently.
The person with the life interest can rent the property out but cannot sell it without the future inheritors’ permission.
It can cause unnecessary conflict between the life tenant and the future inheritors. The life tenant has no motive to improve the asset. It is vital that the will includes an obligation to repair the property to keep in good repair (and also some funds to enable that).
PORTABLE LIFE ESTATE
A Life Estate can leave the partner in financial difficulty if they need to move to more suitable accommodation in later years. A Portable Life Estate is a more flexible arrangement. When the partner is forced to move into a nursing home, for example, they can use some of the property’s value to enable this.
Any value not used then passes immediately to the children. Later, when the partner dies, the children will receive the rest of their inheritance.