Simply put, a Life Rights Agreement (LRA), also called a Life Story Agreement, is an agreement that grants a person or company the right to purchase and develop someone else’s life story into some type of media. Getting permission to tell a person’s story is important, as every state recognizes a person’s “right of publicity”.
Written by Jane Meggitt; Reviewed by Jann Seal, Licensed Real Estate Sales Associate. Former California Real Estate Sales Associate.; Updated December 04, 2018A life tenant is exactly what the term implies. An individual receives life rights to occupy or otherwise use a property as long as they live. The life tenant has every right to enjoy the property as a standard owner would, other than the fact that they cannot sell or transfer the property, or obtain a mortgage on their own. They can do so in conjunction with the remainder owner, or remainderman, the person or people who will receive the property upon the life tenant’s death. Life tenancies, also known as life estates, are generally irrevocable and are created for estate planning purposes to avoid probate.
The life tenant's assets are evaluated upon death to determine the estate tax base. If the assets are more than the estate tax value, which is federally and state mandated, then an estate tax must be paid.
Paying the bills is one of the life tenant’s responsibilities. That includes paying property taxes, homeowner insurance, utilities, maintenance, repairs and any other expenses connected to the property. The life tenant receives any tax breaks related to their property, not the remainder owners. This includes a homestead exemption in states that offer it.
Remainder owners, named in the life estate transfer, are often the children or other relatives of the life tenants. If the remainder owner runs into financial issues while the life tenant is still alive, the life tenant’s rights to continue living in or using the property are protected from the remainder owner’s creditors. The downside is that the life tenant cannot change the remainder owner if they know it is likely the person will lose the property when they die.
If the life tenant decides they no longer wish to live on the property, that doesn’t mean the dwelling automatically goes to the remainder owner. Life means exactly that, and while the life tenant is still alive, he or she can rent the property and receive the rental income.
Most life tenants are older individuals who want to stay in their homes. This is also the demographic most likely to require nursing home care at some point. Medicaid has a look back period of five years, or 60 months, for transfers from individuals to children or other parties before the individual requires Medicaid services. As long as the life estate transfer was made more than 60 months earlier, it remains in effect should the life tenant go into a nursing home. If the transfer was made less than 60 months earlier, Medicaid will disqualify it, but this is one of the few situations in which a life estate may be revoked and transferred back to the life tenant as owner.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.
A life tenant is exactly what the term implies. An individual receives life rights to occupy or otherwise use a property as long as they live. The life tenant has every right to enjoy the property as a standard owner would, other than the fact that they cannot sell or transfer the property, or obtain a mortgage on their own. They can do so in conjunction with the remainder owner, or remainderman, the person or people who will receive the property upon the life tenant’s death. Life tenancies, also known as life estates, are generally irrevocable and are created for estate planning purposes to avoid probate.
The life tenant's assets are evaluated upon death to determine the estate tax base. If the assets are more than the estate tax value, which is federally and state mandated, then an estate tax must be paid.
Paying the bills is one of the life tenant’s responsibilities. That includes paying property taxes, homeowner insurance, utilities, maintenance, repairs and any other expenses connected to the property. The life tenant receives any tax breaks related to their property, not the remainder owners. This includes a homestead exemption in states that offer it.
Remainder owners, named in the life estate transfer, are often the children or other relatives of the life tenants. If the remainder owner runs into financial issues while the life tenant is still alive, the life tenant’s rights to continue living in or using the property are protected from the remainder owner’s creditors. The downside is that the life tenant cannot change the remainder owner if they know it is likely the person will lose the property when they die.
If the life tenant decides they no longer wish to live on the property, that doesn’t mean the dwelling automatically goes to the remainder owner. Life means exactly that, and while the life tenant is still alive, he or she can rent the property and receive the rental income.
Most life tenants are older individuals who want to stay in their homes. This is also the demographic most likely to require nursing home care at some point. Medicaid has a look back period of five years, or 60 months, for transfers from individuals to children or other parties before the individual requires Medicaid services. As long as the life estate transfer was made more than 60 months earlier, it remains in effect should the life tenant go into a nursing home. If the transfer was made less than 60 months earlier, Medicaid will disqualify it, but this is one of the few situations in which a life estate may be revoked and transferred back to the life tenant as owner.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.