NY estates planning & probate attorney Russel Morgan, Esq. explains what a retained life estate is and how is it used in home transfers. He notes that a retained life estate is used in a deed transfer, often from an individual to an irrevocable asset protection trust, particularly for Medicaid planning. The significance lies in the assurance it provides: although someone else manages the trust, the individual retains the right to live in the property for life, collect any income it generates, and remain responsible for taxes, maintenance, insurance, and other associated expenses. This is especially important for those receiving senior or STAR benefits. Additionally, it preserves the step-up in basis and limits capital gains taxes upon the transfer at death.