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What Is a Life Estate?
“Life estate” is a term used to describe a type of joint ownership in real property. In a life estate, two or more people have an ownership interest in the same property but for different periods of time. It allows one person, the recipient of the life estate, to remain in a house for life, or until his or her death. A person who retains a life estate is called a “life tenant.” After the life tenant passes away, the interest of the property passes to the other owner, known as the “remainder man.” It is commonly used to avoid probate and give real estate to children without the parent losing her ability to live in the home.
For example, mom is 80 years old and has a life estate to her home. Her son is to take title after she passes away. The mother is the life tenant while the son is the remainderman.
Why Create a Life Estate?
As discussed above, life estates are typically used to avoid probate and give real estate to children without the parent losing her ability to live in the home. If a person owns a home in her name alone, and the property is not held in trust, the home will go through probate upon the person’s death. Probate is a lengthy process and delays distribution of real property.
A life estate can also ensure that someone you love cannot be kicked out of your home. Let’s say a widower remarries but the son doesn’t care for his step mother. Fearing that his son may try to kick out the stepmother upon the widower’s death, the widower may elect to create a life estate and make the stepmother a life tenant and the son the remainderman.
How to Create a Life Estate
A life estate can be created by a deed or will. If it is created by deed, it needs specific language identifying the life tenant and the remainderman. The phrase is typically some version of, “to Sharon for life, to Beth for the remainder.” In order for the life estate to be valid, it must be signed by the original owner of the property and the person receiving the property in the presence of a notary. Then, it should be recorded with the county record’s office.
If you create a life estate by will, most states don’t require specific language. So long as the will says that the property goes to the life tenant for the rest of her life and then transfers to the remainder man upon the life tenant’s death, a life estate is created.
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Can a Life Tenant Make Improvements on the Home?
Even though life tenants have an interest in the property, they do not own the property forever because the remainderman has the future interest. For that reason, the life tenant is not allowed to do anything that devalues or changes the characteristic of the property without the consent of the person who has a future interest. In that regard, the life tenant really can be thought of as simply a tenant with a right to live in the property for life, while the remainder man is the landlord.
Can a Life Tenant Sell or Lease Her Life Estate?
The short answer is “yes,” but her ability is limited. The property rights are only valid during the life tenant’s life. If Sally owns a life estate but sells her life estate to Mike, Mike only has the property rights during Sally’s lifetime. If Sally leases her life estate to John, John loses his lease as soon as Sally passes away.
Do I Need an Estate or Property Attorney?
Creating a life estate is no easy task. An estate planning attorney can help you create a life estate correctly and ensure that your property is distributed in the way you intend.
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Last Modified: 07-25-2017 08:34 PM PDT
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