When an elder who retains a life estate (and has transferred a remainder interest to their adult children) is thinking about selling the house, it’s time to sharpen pencils and start doing the tax calculations.
NJ.com’s recent article, “What a ‘life estate’ means for your home,” discusses how this estate planning strategy works. A life estate gives the holder the legal right to the possession of real estate.
The owner of the remainder interest also has an ownership interest in the property. However, the life estate holder has the right of possession.