A life estate is a specific type of real property conveyance in which a person is granted the use and ownership of a piece of real property for the duration of their lifetime. A conveyance is the transfer of an interest in real property, such as a home or commercial real estate. Such an arrangement allows one person to remain in a home until their death, at which time the home passes to the other owner.

A legal life estate is created by the person who owns the property (or, the grantor), and it is given to the recipient (or, grantee). This is according to both common and statutory law. Life estates are most commonly used to convey property between relatives, or close friends. The person who is granted these rights is referred to as the life tenant.

Life estate arrangements are useful for circumstances in which the property may be used by another person for an extended period of time, but the owner would like for the property to revert to their own possession for legal purposes. The fact that the property will return to the original grantor is the defining aspect of a life estate, and is referred to as reversion.

An example of a life estate would be if an adult child states in their estate planning documents that they grant their named parent the right to live in their real property, until that parent’s death. Another example would be including that the named parent may also receive rental income from the grantor’s property, at least until the grantee’s death. The holder of a life estate is generally entitled to use the property during their lifetime; however, they will not be able to transfer it to their own heirs upon their death.

How Is A Life Estate Created And Terminated?

It is considerably simple to create a life estate. The grantor creates a written document in which they indicate that they are conveying property for the length of someone else’s life. Conveyance occurs when a grantor uses words of conveyance in order to transfer an interest in property to a grantee. As such, a life estate is a type of conveyance and is created in much the same way.

Generally speaking, the writing used will mirror the following language:

  • “I, Party A, convey my real property to Party B, for life.”

This writing is generally contained within a deed or a will, although it is important to note that the exact language requirements for creating a life estate may differ between states or even jurisdictions.

A life estate may be terminated upon the death of the tenant, or grantee. However, life estates can also be cut short, before anyone dies. Some examples of when this can happen include:

  • The life tenant commits impermissible waste, or, “overt and willful acts of destruction” which drop the property value; or
  • The life tenant violates a condition that has been attached to the life estate. As long as the conditions are not considered to be unlawful, grantors may attach any written conditions that they wish to the conveyance of a life estate.

The most common type of life estate, which is created by words of conveyance, is measured by the grantee’s life. As previously mentioned, when the life tenant dies, the owner has the right of reversion. What this means is that upon the tenant’s death, the property reverts back to the owner; if at that point the owner has also died, the property goes to the owner’s heirs.

Why Would I Want A Life Estate? Are There Any Responsibilities Associated With Being A Life Tenant?

Some of the reasons why a person would want to create a life estate include, but may not be limited to:

  • Avoiding probate, as a life estate is a way to pass your home to your children or other beneficiaries without having to go through probate;
  • Tax planning, in that if you retain a life estate in your property, it continues to be an asset of your estate and allows your children to inherit the property at the value determined at the date of the parent’s death; and/or
  • Ensure protection for the life tenant, as utilizing life estates can provide peace of mind in order to ensure their loved ones can remain in the property for the rest of their lives.

If you are a life tenant, you will generally be tasked with the following responsibilities:

  • Paying the mortgage;
  • Paying property taxes;
  • Paying insurance; and
  • Making all necessary repairs on the property.

During the duration of the life estate, a life tenant is generally entitled to all uses and profits from the land. The purpose of these obligations is to avoid hindering the rights of those who will own the property after the life tenant. However, because the life tenant does not have any legal rights in terms of transferring the property when the life tenant dies, they may not commit waste.

In legal terms, there are three different kinds of waste. The first is referred to as voluntary or affirmative waste, and is any act that causes the property to lose value. Generally speaking, a life tenant may not commit permissive waste. What this means is that the life tenant may not neglect their obligation to keep the premises in reasonably good repair.

The third type of waste is known as “ameliorative waste.” This refers to engaging in acts that will enhance the property’s value. It is important to note that the rules which govern ameliorative waste differ between states. While some states require that any property changes are only to be made with the consent of the grantor, or any other party who may have an interest in the property, other states are considerably more lenient.

Such states have determined that the life tenant may make reasonable improvements, so long as the grantor (or anyone else with an interest in the estate) does not object to these improvements.

What If I Have A Dispute Over A Life Estate?

Life estate disputes are generally resolved through a civil lawsuit, which may result in a damages award issued to either the life tenant or the remainderman. This would depend on the losses experienced by each party.

An example of this would be how a fraudulent transfer of a life estate interest can affect both the life tenant and the party whom the life estate is supposed to revert to. This will usually require a detailed analysis of the deed documents. This is why it is always best for the deed document to be preserved in writing, and recorded with the county office, even though recording a deed is not legally required.

Do I Need An Attorney For Life Estate Deed Laws?

Whether you are considering a life estate or are experiencing issues associated with a life estate you are involved with, you should contact an experienced and local property attorney. A local lawyer will be aware of your state’s specific property laws, and how those laws will affect your legal options moving forward.

A property lawyer can review any documentation that you are provided with prior to signing to ensure that everything is legally enforceable. Additionally, your attorney will also be able to represent you in court, as needed, should any issues arise.