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Thank you for your question. Please permit me to assist you this evening.Ideally, what would you hope to accomplish? I ask because the best option is the one your son suggested. He can create a formal life estate on the premises which would be recorded on the deed (so he could not evict you if he, for example, ever changes his mind), you retain the property, and the property is now protected from creditors or from medical programs such as MediCal and Medicaid. This, to you, is likely the simplest solution as you retain control over the premises without any of the risks of home ownership.Good luck.
I am asking about the downsides and the process involved or at least a reference of how to do this with my son( Note: California is a community property state )
Richard,Thank you for your follow-up. I realize California is a community property state which is why your spouse is arguably entitled to those funds. Once you sell the property to your son, it no longer becomes communal as it now exists solely under his name. The downside is that this is no longer your property and as a life tenant you are still required to pay taxes on the property, maintain it, and not cause waste (damage the property). The process is fairly straightforward, you would need to create a deed where an addendum is affixed granting you a life estate, both you and your spouse would have to sign, and then split the proceeds. Both will be responsible for any capital tax gain on the sale of the property, which is another downside as it can also affect your social security benefits. As a consequence you may want to speak with an attorney to create a spendthrift trust so that the proceeds of the sale enter the trust and not go directly to you (which will help both with maintaining benefits and paying less in taxes).Good luck.