Life Time Rights and a Will

Life Time Rights: My mom died recently. Years ago there was some property that was given to my mom, and then with love she gave it to my brother. He gave my mom life time rights on the land. However, my brother died before my mom and left a wife and kids. Does my mom's will override the deed.

You really need to get a copy of each of the deeds involved and follow the flow of ownership. Also, you need to confirm whether there were any other legal documents governing the use of the property other than the deeds. A title report or "run down" (your attorney can help you with that) will be helpful. A title report will list all of the owners of the property and anyone that has interests in the property (that will include things like public utilities and other interests, easements, etc. which are unlikely to affect what you're evaluating). The typical way the arrangement you describe is created would have been for your mother to have received a gift deed (a type of deed used to give property as a gift without consideration) to give ownership of the property to her as a gift, as you indicated. Then your mother would have deeded the property to your brother (presumably as a gift as well), but in that deed your mother would have reserved the right to use the property for her lifetime. This is called a life estate and her retention (reservation) of these rights should be reflected in the deed. You can verify all of this with a proper review of the documents noted above. If your brother died, unless there was a contingency addressing that in the deed your mother gave to him (see below), then your brother's estate would own the interest in the property following your mother's death. Thus, your brother's will, or if he did not have a will the laws of intestacy of the state where he lived (we cannot give specific state or legal information on this site) would govern. In either case, if your brother had a wife and children, the odds are that his will and state law would transfer the interests your brother, then his estate, would have in the property to his wife and/or children and/or trusts for them. When your mother later dies, the property will be owned solely by whoever inherited your brother's rights.

However, if the deed your mother gave to your brother that delineated her life estate had a contingency that the ownership of the property would only be transferred to your brother if he survived her, then your brother's interests (called a contingent remainder interest) would lapse on his death before your mother. If this were the scenario, then your mother would own the entire interest in the property and on her death the property would be subject to her will.

So, just like the answer to every legal question, it depends! You should have a real estate attorney in the area where your mother's property is located review the title report and deeds and help you determine precisely what the legal rights are as they will affect the ownership of the particular property in a dramatic manner.

Another point, let's say that the result of the deeds is not what the family intended. If that is the case and everyone is willing to cooperate, it might be possible for certain people (e.g., your brother's wife) to disclaim part of their interests in the property and shift the ownership. This will be very tricky based on the above facts, especially if your brother's children are minors. However, a creative probate attorney might be able to help. Another approach to correct the situation if the ownership is not what the family intended and if (which might be a big if) is for those receiving the property inappropriately (e.g. your brother's wife) to gift interests in the property to those who should have an interest. You need to have the lawyer helping you address the annual gift tax exclusion.

You need to be careful with property handling this because you don't want to create any issues with respect to the title to the property that might make it more difficult to sell later.

Finally, there are some income tax issues to consider. The property should get a step up in tax basis on your mother's death if she in fact held a life estate. That might eliminate any capital gains tax if the property is sold. Therefore, the resolution of the exact nature of the legal ownership should then be reviewed with your accountant to be sure you get the best tax result.