As discussed in a prior blog entry, an Enhanced Life Estate Deed is a type of deed which provides the grantor with certain rights during life, with the remaining interest to go to a named person at the grantor’s death. This can be a helpful estate planning tool. However, there are some down-sides to the Enhanced Life Estate Deed. Perhaps some of the biggest negatives arise when trying to get title insurance.
Some title insurance companies will not insure these types of deeds when they are used to exclude a child from inheriting the property–especially where they give the property to the other siblings. In order to avoid future problems, if an Enhanced Life Estate Deed is being used to transfer property to children, it is safest to include all children on the deed. If that is not the grantor’s intention, then other estate planning methods, such as a Living Trust, may be a better approach.
Similarly, if the grantor signs the Enhanced Life Estate Deed and later wants to change the remainder beneficiary to another person, a title insurance company may require that the grantor first obtain consent of the current remainder beneficiary and record the consent in the real estate public records. This could present a problem, particularly if there has been a “falling out” between the grantor and the beneficiary.
Because of these potential concerns, it is not advisable to execute an Enhanced Life Estate Deed without first receiving advice from an experienced estate planning attorney.