Is this fraud? Life estate property question

[jkorin]

I filed chapter 7 in 2003 and got a discharge in 2004 (no asset case). In 2002 a relative had signed a deed giving me her home, while retaining a life estate in the property. I did not sign the deed, although I did know about the transaction, as the owner always wanted me to have the property upon her death. The deed was not given to me for recording until late 2004, after the discharge, and was recorded in early 2005. The home was not listed in the BK filings, as my lawyer at the time felt that the property would not be mine until the death of the original owner.

As part of another, unrelated case, I am being told that the transfer should have been a part of my bankruptcy, even though I had nothing tangible to show any kind of relationship to the property. Am I in trouble now, and, if so, what should I do. The original owner is still alive.

Thanks for any thoughts.

[Flamingo]

It sounds like you received legal advice as to this situation when you filed. What has occurred to make you doubt that advice now?

[jkorin]

The lawyer for the other side is making noises about reporting me to the BK trustee and/or the US Attorney for fraud. I still believe that the decision not to include the property was correct, but want to get other opinions, just in case. My original attorney is not around anymore.

[jribe]

The lawyer for the other side is making noises about reporting me to the BK trustee and/or the US Attorney for fraud. I still believe that the decision not to include the property was correct, but want to get other opinions, just in case. My original attorney is not around anymore.

then you need the advice of another attorney. this forum is not the right place for your question. You need a practicing attorney in your area to help you and go over the specifics of the case. If the other attorney is making it a big deal - don't ignore it.

[jkorin]

Thanks. I will consult with an attorney.

[HHM]

Not fraud, but the transaction should have been included in your BK petition, but nothing would have come of it. This is an empty threat from the lawyer.

[AngelinaCat]

We sold our property to a state entity in 2001, but retain a life-estate for my husband and I. We listed this property/life estate as it is our residence and it is Homesteaded in accordance with Florida law. The money from the sale went into an irrevocable Charitable Remainder Unitrust, and is part of our Retirement.

The trustee abandoned ALL interest in the property as being "totally encumbered and wholly exempt".

Now I realize that this is the other side of the situation you have. But we were told that while we have our life estate, we can do anything we wish to with the property including renovations, repairs, etc.,--everything except selling it, or taking a mortgage against it. And while it might be a courtesy to let the state entity know any plans ahead of time, it was not necessary, as for all intents and purposes, WE still own the property. We also still pay property tax on it.

So, I would say that if your BK attorney said that you did not need to include this property in your petition, he/she was correct, because technically you don't own it yet.

It sounds like you have an enemy after you trying to stir up trouble. Good luck to you.

[AngelinaCatHub]

In a life estate, the OP did not actually own any interest in the property. A quit claim deed has no power until the end of life. The land is fully owned by the person with life estate privileges and that person is responsible for taxes and all usage barring damage to or transfer of the property out of their life estate. Legally, the Op had NO INTEREST in that property and the bk Court cannot take it. It belongs 100% to the estate owner until death. After death, then that changes. The Court until that death would have no power or claim.

A life estate is a concept used in common law and statutory law to designate the ownership of land for the duration of a person's life. In legal terms it is an estate in real property that ends at death. The owner of a life estate is called a "life tenant".

Although the ownership of a life estate is of limited duration because it ends at the death of the person who is the "measuring life", the owner has the right to enjoy the benefits of ownership of the property, including income derived from rent or other uses of the property, during his or her possession. Because a life estate ceases to exist at the death of the measuring person's life, this temporary ownership agreement cannot be left to heirs (intestate)or devisees (testate), and the life estate cannot normally be inherited (but see Life Estate Pur Autre Vie, and Estate for Term of years). At death, the property involved in a life estate typically falls into the ownership of the remainderman named in the life estate agreement.

A land owner of an estate cannot give a "greater interest" in the estate than he or she owns. That is, a life estate owner cannot give complete and indefinite ownership (fee simple) to another person because the life tenant's ownership in the property ends when the person who is the measuring life dies. For instance, if Bob conveyed to Ashley for the life of Ashley, and Ashley conveys a life estate to another person, Brenda, for Brenda's life [an embedded life estate], then Brenda's life estate interest would last only until whoever dies first, Brenda or Ashley. Then Brenda's interest conveys to the remainder interest or reverts to the original grantee. Once Ashley dies, however, whoever possesses the land loses it (with the land likely reverting to its original grantor). This is a life estate "pur autre vie," or the life of another. Such a life estate can also be conveyed originally, such as "to A until B dies."

Another limitation on a life estate is the legal doctrine of waste, which prohibits life tenants from damaging or devaluing the land, as their ownership is technically only temporary.

http://en.wikipedia.org/wiki/Life_estate

[jkorin]

Today, I received a copy of a motion filed by the US Trustee asking that my BK case be reopened to investigate this matter. The motion indicates that I incorrectly failed to include this asset in my filing and asks that a trustee be appointed to investigate the matter. The case is in the Eastern District of New York. Can anyone recommend a good BK attorney who practices in this district to represent me? Any additional thoughts would be greatly appreciated.

Thanks.

[AngelinaCatHub]

Today, I received a copy of a motion filed by the US Trustee asking that my BK case be reopened to investigate this matter. The motion indicates that I incorrectly failed to include this asset in my filing and asks that a trustee be appointed to investigate the matter. The case is in the Eastern District of New York. Can anyone recommend a good BK attorney who practices in this district to represent me? Any additional thoughts would be greatly appreciated.

Thanks.

Please read my thread above your last one. I do believe you have some enemy that wishes you ill. I am more than familiar with this. Make sure in your 2004 interview or hearing, that you were advised by your lawyer. Do some real time research on 'life estates'. YOU DO NOT OWN ANYTHING, UNTIL THAT PERSON DIES. BTW is she alive and well?

You cannot depend on winning the lottery in bk. It is silly that the UST wants to open this up. It would be tantamount to me saying "I AM A POTENTIAL MILLIONAIRE, I PURCHASED THIS WEEK'S LOTTERY TICKET". What crap.

Please keep us all posted. We gave to the State 10 mil worth of property with a life estate upon it. It caused us no problem. They could not take it as gift and we were paid a mil for it and since we were "well off" at that time, we put it into a Charitable Trust. Then my enemy attacked me and attempted to turn over the Trust. An AP is still open regarding a now eight year old suit untried. He is attempting to put me into Federal prison for things he thinks I did to him. Guess what, it was over an EEFFFING BLOG in our County. I never met the man or talked to him directly. Only within depositions.

You see, my friend, we've been through Hell's Half Acre and back. It seems like you're going to get your piece of it as well. Do not let it become your 5x10x6. GBWY 'Hub

[jkorin]

Thanks for the post. The person transferring the house to me is alive, but not well (dementia). I agree with you 100% regarding ownership of the property not vesting in me until she dies. However, I guess that the US Attorney does not see it that way. I've done loads of research on the issue of life estates, but there is little on point. In any case, I've got to respond to the motion and need to find a good lawyer to represent me on this.

[AngelinaCat]

Who has care of your family member? Is there a Durable Family Power of Attorney in place?

[DeadManCrawling]

You should prevail on this, in any case.

Also a good time to mention another legal point about life estates. For BK purposes any inheritance received within 6 months of filing is to be reported and could become property of the BK estate. In practice, this rarely occurs. Some of the older life estate deeds were considered vested on bestowal, meaning you HAD received an inheritance.

Some states allow the Ladybird or Enhanced Life Estate Deed. This version, for tax and legal purposes means nothing, and does not qualify as any type of inheritance. It can be revoked at any time, as long as the original owner is competent.

this can get a bit more compicated when a Durable Power is being used and the person (as above) has a mental incapacity. At that point, the grantor is no longer mentally equipped to revoke the deed.

In any case, I think the OP will prevail on the facts and the opposing attorney is simply fishing wildly for ideas.

Good luck,

-dmc

[jkorin]

Care of the individual is shared. I pay most of the bills, with the remainder being paid by another family member. I have the individual's power of attorney. The power of attorney was not used in the transfer of the property. It was executed five years later.

It should be kept in mind that the actual deed was not conveyed to me until six months after the BK discharge, at which time it was filed.

[DeadManCrawling]

I can't see the BK trustee or opposing attorney prevailing on this, as long as the transfer was six months later. Better count your days and look at a calendar, just to make sure. A mistake of even ONE day could toss this up into the air.

If all else is correct, and the deed did not convey any inheritance at that time, I think any court would toss this our.