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Life tenancy and tax lien

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Casey6602

Junior Member
What is the name of your state (only U.S. law)? New York
My daughter gave me "life tenancy" of a house she owns by including a paragraph on her deed to that effect. She now wants to sell the house (which I agree with) and we have recorded an amended deed dissolving my tenancy. My question is: I have an income tax lien filed on me. It was never attached to her property in any way. Will this affect the sale of this house now? My name is NOT on the deed at all and has never been (other than the paragraph mentioned above) Also,was this ever a "true" life estate since no other documents were ever filed?:confused:What is the name of your state (only U.S. law)?
 


KingFahad

Member
What is the name of your state (only U.S. law)? New York
My daughter gave me "life tenancy" of a house she owns by including a paragraph on her deed to that effect. She now wants to sell the house (which I agree with) and we have recorded an amended deed dissolving my tenancy. My question is: I have an income tax lien filed on me. It was never attached to her property in any way. Will this affect the sale of this house now? My name is NOT on the deed at all and has never been (other than the paragraph mentioned above) Also,was this ever a "true" life estate since no other documents were ever filed?:confused:What is the name of your state (only U.S. law)?
Life estates are often used to simplify the division of property in a will or to avoid the expense of probate.

An owner may reserve a life estate by transferring property to another individual, while reserving the right to use the property for the remainder of his or her own life.


Life estates typically CANNOT be transferred.



Your lien will not affect the sale/transfer of the property.

You situation describes an estate in reversion going back to the grantor.
This originated from the express grant you were given.
 

tranquility

Senior Member
Life estates are often used to simplify the division of property in a will or to avoid the expense of probate.
Maybe.

An owner may reserve a life estate by transferring property to another individual, while reserving the right to use the property for the remainder of his or her own life.
Um..no. A life estate is a present interest in the property. The measuring life can be anyone's.

Life estates typically CANNOT be transferred.
Life estates typically can be transferred. They are not transferred because, who wants to buy a property interest which is not able to be counted upon?

Your lien will not affect the sale/transfer of the property.
Are you sure about that? The IRS gets a bit pissy when you give valuable things away when you have a tax lien.

You situation describes an estate in reversion going back to the grantor.
You should look up the term "reversion" in relation to property law. The reversion only occurs in this instance when the measuring life ends. This is a gift of a present property interest which, absent disagreement with the IRS, would result in a merger.

Come on King, you've been pretty good so far. Don't get silly and just start talking.

As to the OP, I don't know. I suspect they can unwind this, but am unsure if it is worth their time. You own(ed) stuff. You gave it away. The IRS would have liked the stuff to pay for the taxes you owe.

What do you think they'll do?
 

KingFahad

Member
Life estates can be transferred yet rarely do would have been the proper
statement to make.

Due to valuation issues they rarely do-would have been better. (On my part for both)

(Off topic)
The lifetime of the estate owner can be estimated using the actuarial table available from the IRS.
http://www.irs.gov/pub/irs-pdf/p1457.pdf
Estimating the proper discount rate (from a valuation standpoint) would obviously be difficult due to scarcity of market data. Subtracting the value of the remainder estate from the fee simple estate can be achieved- for valuation of the life estate.

Given the above (off topic) variables to determine value, and citing OP's post-
I do not believe the IRS will pursue OP's lien through these channels.
 
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Casey6602

Junior Member
Life Tenancy and tax lien

Thank you all for replying to my post. I probably should have added that I am not worried about what the IRS can do to me ONLY if the reversal of my life tenancy will remove my interest in the property and return FULL ownership to my daughter so that the sale will not be affected by my lien or name on the deed. Now that it has been reversed, full ownership should be hers again and I'm hoping that the new title search will reflect that. Please let me know if you thing I'm right. Can't tell you how much sleep I've lost over this already!!!
 

tranquility

Senior Member
I disagree with the King. The IRS can CERTAINLY unwind this. Period. I'll cite if anyone gives a reasonable argument.

YOU CANNOT GIVE THINGS AWAY WHEN THE IRS HAS A LIEN AGAINST YOU.

Now, will they? I don't think so. There are difficulties. How hard do they want to work? That is the only issue.
 

nextwife

Senior Member
She has never had an ownership interest in the property. The IRS cannot lien what she does not own. The life estate gives her a right of use. Had SHE transferred the property and reserved herself a life estate, yes, it could be unwound. But If I own a home and grant lifetime use to another while retaining ownership for myself, the life estate tenant's creditors can only lien whatever interest the life estate tenant has or had.

As to tranferring the life estate interest, that depends on the language used. I have seen many life estates that contain languauge that self extinquish when the life estate tenant vacates the property.
 
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tranquility

Senior Member
While I understand many use the term casually, a life estate IS the present interest in the property with the remainderman the future interest which ripens when the measuring life(s) ends.

Not always in reality because of the risk, it can be sold, gifted and borrowed against just like any other property. It would generally not be a "life estate" if it required the person to live there. A life estate can be made defeasible by a condition subsequent or other executory limitation in the deed, courts seem to be treating such a defeasance clause to have transferred a fee simple subject to an executory limitation.

As KingFahad correctly pointed out, the IRS has tables on valuation of life estates.
 

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