Legal Question in Real Estate Law in New Jersey
Voluntary partition of life estate for FMV
Life estate on $1.5M family house is held in NJ by 1 woman and 5 remainders for 30 years. Woman has NEVER paid any taxes, and hasn't set foot on the property in 20 years [weird recluse Aunt]. The remainders pay all upkeep. She is 83 yo, and the remainders amicably want to give her $50k for the life estate, and sell the house. She agrees. The IRS actuarial value is like 45% for her l.e., even though she is on death's door. Everyone wants to proceed before she dies. What should we do? The issue is the tax liability, and medicaid posible estate seizure (she's on medicaid with a half million dollar l.e.). Can she just give it to us? Can we petition for partition? She WANTS to abandon the property, the taxes have been over 100k during the l.e. (which the remainders paid), and they are 20k a year now.
3 Answers from Attorneys
Re: Voluntary partition of life estate for FMV
In all probability your aunt can sign over her life estate in lieu of payment for past due taxes. A properly worded agreement or release should protect her from taxes and medicaid eligibility. In order to make it as solid a transaction as possible, she should have her own lawyer review any paper work. If you or any of your relatives need help with this transaction, please contact me.
Re: Voluntary partition of life estate for FMV
A life tenant can enter into the agreement you describe. There is n ot enough information provided by you to answer the tax questions, and an accountant should be consulted. As to the Medicaid lien, it has to be satisfied to acquire insurable title. If the Seller's net proceeds are less than the lien, you need to request that Medicaid accept the lesser amount to release the lien.
Re: Voluntary partition of life estate for FMV
Your question does not lend itself to answers that could be given on a Q&A such as this.
You should consult an estate lawyer to advise about medicaid, tax issues, and a family agreement about disposing of the property.
This response is not legal advice, since I do not have all of the information that would be required, and I do not have a representation agreement with you.
* If the answers to your question confirm that you have a valid issue or worthwhile claim, your next step should almost always be to establish a dialog with a lawyer who can provide specific advice to you. Contact a lawyer in your county or township.
* Another reason for contacting a lawyer is that it is often impossible to give a good answer in the Internet Q&A format without having more information. The unique circumstances of your situation and things that you may not have thought to mention in your question may completely change the answer. If you want to be sure that you have a complete answer to your question and an understanding of what that answer means, establish a connection with a lawyer who practices in the area of your concern.
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