Life Estate Law

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 What Is a Life Estate?

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

In general, a legal life estate is created by the person who owns the property, who is referred to as the grantor, and it is given to the recipient, who is known as the grantee of the life estate. Life estates are most commonly used to convey property between relatives, spouses, or close friends. The person who is granted a life estate is also commonly referred to as the life tenant.

Life estate arrangements are particularly useful for circumstances in which the property may be used by another person for an extended period of time, but the owner would still like for the property to revert to their own possession, or to the possession of their designated beneficiaries, for legal purposes. When a piece of property is subject to an arrangement where it will revert back to the original grantor of the property, that right to retake the property is known as a reversion.

One common example of a life estate arrangement is one spouse granting their other spouse or ex-spouse the right to live in their real property until they die. Then upon the death of that party, the property will revert back to the grantor or their heirs. As such, the holder of a life estate is generally entitled to use the property during their lifetime. However, the life tenant will not be able to transfer the property to their own heirs upon their death. Because of the fact that a life tenant has no right to keep or otherwise transfer the property in which they live, there are often many disputes over life estates.

Examples of common disputes over life estates include:

  • Disputes involving the life tenant selling or transferring the property to another party, when they do not have the legal right to do so;
  • Disputes involving the upkeep of the property, as allowing the property to deteriorate is not in the best interests of the future property holder;
  • Disputes involving whether or not a life tenancy was legally created; and/or
  • Disputes involving other various property duties, such as paying taxes and preventing the property from encumbrances.

Life estate disputes are generally resolved through the party with the right of reversion initiating a civil lawsuit, which may result in a damages award. As far as the actual amount of damages, that will be dependent on the losses experienced by the party alleging that they have been financially harmed.

For example, if a life tenant makes a fraudulent transfer of a life estate interest, that can affect both the life tenant and the party whom the life estate is supposed to revert to. The party that has the right of revision could then civilly sue the life tenant in court to recover the property, or the value of the property, that they fraudulently granted. Because of these common disputes, it is important that the life estate is recorded on the deed of the property so that a purchaser of the property is informed of the presence of the life estate.

What Are The Types of Legal Life Estates?

There are a few different arrangements in which a life estate may be utilized, and as such there are different types of life estates. The following is a list of common life estates:

  • Homestead Life Estate: A homestead life estate is a life estate that was created by law to protect homeowners from creditors attempting to collect debts by legally ensuring a person’s right to live in their homestead.
    • It is important to note that in some states this life estate is not automatic, and it is necessary for the owners of the home to file for the exemption and both be signatories on the deed;
  • Elective Share Life Estate: An elective share life estate is a life estate that protects one spouse from being disinherited from a property by their deceased spouse.
    • These life estates are commonly created by force of law when one spouse passes away but does not leave property to their surviving spouse; and
  • Dower or Curtesy Life Estate: A dower life estate is a wife’s life estate interest in her husband’s property, whereas a curtesy life estate is a husband’s life estate interest in his wife’s property. Typically, a surviving spouse will have the right to property for the rest of their lifetime.
    • It is important to note that these life estates are not as common, given that they are not representative of all relationships.

How Is Life Estate Created?

In order to create a valid and legal life estate, there must be a written document that creates the life estate. As far as the contents of the document, it is actually simple to create a life estate. All that needs to occur is that the grantor creates a written document in which they indicate that they are conveying property for the length of someone else’s life.

The actual conveyance occurs when a grantor uses words of conveyance in order to transfer an interest in their property to a grantee, who becomes the life tenant. Generally speaking, the following writing is sufficient in creating a life estate:

“I, the name of the grantor, convey my real property to the name of the grantee, for life.”

It is most common for a life estate to be created by language that is present in a person’s will. However, it is important to note that the exact language and requirements for creating a life estate will differ between states and even jurisdictions. Further, there is additional language that can be added to make a life estate revocable.

How Are Life Estates Terminated?

If there is no language indicating that the life estate is revocable, then a life estate typically terminates upon the death of the life tenant, or grantee. However, there are typically statutory laws that allow for a life estate to be cut short if:

  • The life tenant commits impermissible waste to the property;
  • The life tenant commits “overt and willful acts of destruction” which drops the property value; or
  • The life tenant violates a condition that has been attached to the life estate, so long as the condition is not unlawful.

Once again, when the life tenant dies, the original grantor of the life estate, or their heirs or specified beneficiaries, have the right of reversion. This means that upon the tenant’s death, the property will revert back to the grantor. If the original grantor is deceased, then the property will go to their heirs or beneficiaries designated in their written will.

Do I Need a Lawyer for Help with a Life Estate?

If you are considering a life estate, or are experiencing issues associated with a life estate, it is in your best interests to consult with an experienced property lawyer. An experienced property lawyer will be aware of your state’s specific property laws on life estates, and how those laws may affect your legal options.

A property lawyer can also review any documentation regarding a life estate you have been granted, or whether or not such a life estate is legally enforceable. Additionally an experienced attorney will also be able to represent you in court, as needed, should any legal issues arise with a current life estate.

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