Eric Feichthaler

Dear Mr. Feichthaler:

We hold our residence in a living trust we created back in 1998. We have read your columns before about life estate deeds, and wonder if the trust should give the property to the trust through a life estate deed, with our two children receiving the property at our passing. Should we do this so we avoid probate?

— John and Dorothy R.

Dear John and Dorothy,

We have many clients that created living (or revocable) trusts in the 1990s, primarily to mitigate the potential bite of the estate tax. Today, with an exemption of over $12 million per person, this is no longer a concern for anyone I know. The trust still does provide a benefit, in that any assets titled to it will avoid probate. The assets also have the potential to be shielded from the creditors of your beneficiaries

A trust is similar to a corporate entity, in that it does not have a natural “Death.” I assume your trust provides that your two children are the beneficiaries of your trust? If so, when you both pass, the successor trustee would distribute the assets (including your residence) to the two of them, and the property would not have to go through probate. Due to the nature of trusts, the trust cannot be a life tenant through a life estate deed, so you would not have a trust AND a life estate deed impacting your home.

One thing to consider is to deed the property out of our trust and into your individual names, then execute an enhanced life estate deed naming your two children. Most of my clients prefer this method, which leads to an immediate ownership by the beneficiaries at death. If you are considering this option, I do recommend you speak with an attorney first, as your trust may still provide you some of the benefits you sought when you created it in 1998.

Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.