To determine the value of a life estate:
- First, find the line for the person’s age as of the last birthday.
- Then, multiply the figure in the life estate column for that age by the current market value of the property.
- The result is the value of the life estate.
How do you calculate the value of a life estate?
life estate rate). The value of the remainder is found by taking the resulting life estate value and deducting it from the value of the property (or multiplying the value of the property by the remainder rate).
Can a nursing home take a life estate?
This means that, in most cases, a nursing home resident can keep their residence and still qualify for Medicaid to pay their nursing home expenses. The nursing home doesn’t (and cannot) take the home.
How can a life estate be terminated?
Due to this termination, a life estate holder cannot transfer his or her interest in the property through a will. Importantly, a life estate cannot be revoked. Therefore, once a person sets up his or her ownership of a property in a life estate, he or she cannot sell or otherwise dispose of the home.
Do I have to pay taxes on a life estate?
Under Federal Estate Tax Code Section 2036, a life estate is a gift. This means that if the property is valued at more than $14,000, a gift tax must be paid. Finally, if a house is sold after a life estate ends, there is little to no net gain that must be reported on taxes because of the value step-up.