A life estate deed in New York is an estate planning tool that allows the current owner, the grantor, to designate a beneficiary, known as a grantee, who will inherit the property when the grantor dies. Upon the grantor’s death, the property transfers to the grantee named in the life estate deed and doesn’t have to go through probate. If there is a conflict between the grantor’s will and the New York life estate deed, the deed will overrule the provisions of the will. Most often these deeds are created by a parent who wants their children to have the property after they pass.
Given the time, energy, and resources a person uses to plan their estate, you may be wondering, Can a life estate deed be contested?
The general answer is that creditors and legal beneficiaries not named in the life estate deed can contest it in New York Surrogate’s Court.
Contesting a Life Estate Deed
The contesting beneficiary or creditor must file a complaint with the Surrogate’s Court that details why they think the court should invalidate the life estate deed. All interested parties must receive notice of the complaint being filed, and the court will schedule hearings to hear arguments from each side. There isn’t a jury involved in Surrogate’s Court; the judge will rule on your case. Some of the most common arguments used in complaints are explained below, and the beneficiary isn’t limited to one argument.
Lack of Capacity
The grantor must be of clear and sound mind when they execute the New York life estate deed, which means they understand the deed gives the grantee an interest in the property now and after their death. Typically, the contesting beneficiary will use the grantor’s medical records to try to show the grantor was suffering from dementia, mental illness, or another mind-altering disease.
Undue Influence or Duress
Sometimes grantees exert undue influence on the grantor and manipulate the grantor into signing the life estate deed. Undue influence can involve force and pressure—physical or mental. For example, a caregiver may have undue influence over a sick parent.
If someone threatened, intimidated, or coerced the grantor into signing a deed, they signed in a state of duress.
Fraud
If the grantee intentionally lied and misled the grantor into signing the life estate deed, the contesting beneficiary can argue the deed was executed under fraudulent circumstances. To prove fraud, the beneficiary must also show that the grantor materially relied on the grantee’s lies when they signed the deed.
Improper Execution
New York doesn’t have a specific form for life estate deeds, but there are specific elements that must be included in the deed for it to be valid. The language in the deed must state the grantor’s ownership is fee simple and that the grantor wants to transfer the property to the grantee upon their death. The grantor and grantee must have their signatures notarized on the deed, and the executed deed must be recorded with the county clerk. The court can invalidate the deed if any of these elements are missing.
The burden is on the contesting beneficiary to provide sufficient evidence to show the deed should be invalidated.
What Happens If a New York Life Estate Deed Is Invalidated?
If the court rules in favor of the contesting party, the property will be distributed one of two ways.
When the life estate deed is invalidated, the terms of the will control how the property is distributed. The court will grant ownership to the beneficiaries in the grantor’s will.
For grantors who die without a will, the court will assign ownership of the property using New York law.
Can I Revoke a Life Estate Deed?
When a grantor creates a life estate deed, they give the grantees an immediate interest in the property, even though the grantees can’t enjoy the property until the grantor’s death. Because of this, a grantor generally can’t revoke the deed unilaterally; rather, grantees must willingly relinquish their interest in the property for a grantor to revoke a life estate deed.
A grantor may add conditions to their life estate deed that don’t break applicable laws. For example, a grantee may be required to help maintain and not damage the property. If a grantee doesn’t comply with all the conditions, the grantor can revoke the deed.
Are There Alternatives to a Life Estate Deed?
A New York life estate deed is a quick, easy, and cost-effective way for a grantor to transfer their property when they die. However, after the life estate deed is signed, the grantor can’t sell, mortgage, or remodel the property without the consent of the grantee. It’s also extremely challenging to name a new grantee for the property if there’s a dispute after the deed is signed. Two common alternatives to life estate deeds are discussed below.
Transfer on Death Deed
A transfer on death (TOD) deed is another easy way for a grantor to transfer their property when they die. However, this type of deed has a set of restrictions that a life estate deed doesn’t. Some of the restrictions are:
- The grantor isn’t required to keep the title clear of liens or judgments;
- Creditors can file claims against the property for up to two years after the grantor’s death;
- Power of attorney can’t sign the deed on behalf of the grantor; and
- The grantee must survive the grantor by 120 hours to inherit the property.
A grantor who uses a TOD deed has more control over the property, but this type of deed can create an undesirable situation for the grantee.
Revocable Trust
A revocable trust may be better than a life estate deed or TOD deed because it truly gives the grantor 100% control over their property and who will be the named beneficiary until they pass. Using a revocable trust to transfer property means the grantor will retain their ability to sell, mortgage, or make substantial changes to the property without needing the grantee’s consent, and they can modify the terms of the trust to name a grantee if a dispute or issues arise. The property will transfer when the grantor passes away and won’t need to be probated.
Contact Andrew Lamkin for More Information
The Law Office of Andrew Lamkin understands the importance of drafting effective estate planning documents to avoid contests after the grantor passes. Andrew Lamkin has over a decade of experience helping families, and his work on the trust and estate committees for the New York and Nassau County bars gives him insight into how the Surrogate Court has been ruling and laws that may create future issues for the grantor. Contact our office to schedule a consultation.Â
Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.
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