What is a life estate deed in Pennsylvania?

A life estate deed splits ownership of your home in two: you keep a 'life estate' — the right to live in and use the home for the rest of your life — and you give the 'remainder' to your children (or others), who automatically own the home outright when you die. It passes the home outside probate.

Can I sell my house if I have a life estate deed?

Not on your own. Because the remainder interest already belongs to your children, you generally cannot sell, mortgage, or refinance without their cooperation. If the home is sold during your life, the proceeds are split between you and the remainder owners based on actuarial life-expectancy tables. Giving up this control is the main trade-off of a life estate deed.

Does a life estate deed avoid probate in Pennsylvania?

Yes. When you die, the home passes automatically to the remainder owners without going through probate — one of the main reasons families use them.

Does a life estate deed preserve the stepped-up basis?

Yes. Because you keep a life estate, the full value of the home is included in your estate at death, so your children receive a stepped-up basis to the date-of-death value. That is a major advantage over an outright gift of the home, which would leave them with your original (lower) basis and a potential capital gains bill.

Is a life estate deed good for Medicaid planning?

It can be, but timing matters. Transferring the remainder interest is a gift that can trigger Pennsylvania Medicaid's five-year lookback, so a life estate deed generally needs to be done well before long-term care is needed. It should only be part of a Medicaid strategy designed with an elder law attorney.

Life Estate Deeds in Pennsylvania: How They Work, and the Catch

If you want to stay in your home for the rest of your life but make sure it passes smoothly to your children — without probate — a life estate deed is one of Pennsylvania's most common tools. It is powerful, but it comes with a real catch. Here is how it works and what to weigh.

How a Life Estate Deed Works

A life estate deed splits ownership of your home into two pieces:

The life estate — your right to live in, use, and control the home for the rest of your life. You still pay the taxes, maintain it, and enjoy it as before.
The remainder — the ownership that automatically passes to the people you name (usually your children) the moment you die.

While you are alive, you are the life tenant; your children are the remaindermen. When you pass away, the home becomes theirs outright — no probate required.

The Advantages

Avoids probate on the home, so your children take title quickly and privately.
Preserves the stepped-up basis. Because you keep a life estate, the home is included in your estate at death, so your children get a basis equal to the home's date-of-death value. That can eliminate the capital gains tax they would face if you had simply gifted the home outright.
Simple and inexpensive compared to setting up and funding a trust.
No Pennsylvania realty transfer tax — transfers between parents and children are exempt from the state's realty transfer tax.

The Catch: You Give Up Control

Unlike a Lady Bird deed (which Pennsylvania does not recognize), a traditional life estate deed makes an irrevocable gift of the remainder interest. That has real consequences:

You can't sell or mortgage the home on your own. Because your children already own the remainder, you need their cooperation to sell or refinance. If you do sell during your life, the proceeds are divided between you and the remaindermen using actuarial tables.
Your children's problems can reach the home. Their remainder interest can be exposed to their creditors, a divorce, or a lawsuit.
It can trigger Medicaid's five-year lookback. Gifting the remainder is a transfer that Pennsylvania Medicaid may penalize if you need long-term care within five years — see our post on the five-year lookback.

Life Estate Deed vs. Revocable Trust

For families who want to keep full control and the ability to change their minds, a revocable living trust often accomplishes the same probate avoidance and step-up without the irrevocable commitment. The life estate deed shines when the plan is simpler, the commitment is acceptable, and — often — when Medicaid planning is part of the picture and there is time before care is needed.

Is a Life Estate Deed Right for You?

It can be an excellent fit if you want to stay in your home, avoid probate, preserve your children's tax basis, and you are comfortable making an irrevocable decision. It is the wrong fit if you may want to sell, move, or change beneficiaries later.

Because the trade-offs are permanent, this is a decision to make with counsel. At Ament Law Group, we help Western Pennsylvania families choose the right tool — life estate deed, trust, or otherwise — for their goals. Call (724) 733-3500 or schedule a free consultation.

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John W. Ament, Esq.

John W. Ament is a partner and co-founder of Ament Law Group, P.C. in Murrysville, PA. He holds a J.D./M.B.A. from Duquesne University and is a member of the National Academy of Elder Law Attorneys (NAELA), PAELA, and the Pittsburgh Estate Planning Council.

Ready to Protect Your Family?

Estate plans age. Laws change. Whether you need a new plan or a review of what you have, our attorneys help Western PA families get it right — with transparent pricing and a free initial consultation.

Call (724) 733-3500 or schedule a free consultation.