What is a Life Estate . . .
A life estate is a legal right to live in a home as long as the life estate holder lives. That right is reflected on the deed so it is more than simply a lease for life. The ownership, in essence, is divided into two parts. An individual who owns property transfers the ownership (a remainder interest) of that property to another individual (the remainderman), while retaining for the rest of his or her life certain rights to that property. A life estate entitles the owner of the life estate to possess, use, and obtain profits from the property as long as he or she lives, although actual ownership of the property has passed to another individual. The owner of the life estate is still responsible for the expenses and maintenance of the property. For New Jersey Medicaid purposes, a transaction involving a life estate is considered a transfer of assets, but only insofar as the remainder interest is concerned.