What to do if my mother wants to leave her home to her granddaughter but give her son the right to live there until his death?
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What to do if my mother wants to leave her home to her granddaughter but give her son the right to live there until his death?
My mother wants to leave her home to my brother. Due to a loss of his job, he may soon be filing bankruptcy. It has been suggested that she leave the home to his daughter with a right to reside in the home until his death. An attorney friend said that the bankruptcy court would consider this “right to reside” an asset and would be subject to claim during his bankruptcy. Is this true, and if it is, is there another way to insure his right to reside in the home without losing the house to bankruptcy?
Asked on March 20, 2012 under Estate Planning, Georgia
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
It is true. There is a risk of losing the ownership of the life estate when you file Chapter 7 if the life estate is worth more than you are allowed to exempt in Georgia. However, if he files a Chapter 13 bankruptcy - where there is a plan to repay debtors - then he has a better shot of keeping the life estate. Understand that you would not lose the house - he would lose his right to the life estate. And the life estate could be sold as an asset. That means a stranger could live in the house until they died. Go seek help from an estate planner. Good luck.
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