The Purpose of a Life Estate

A life estate refers to an interest in real property that is held by an individual only during his or her lifetime.  Upon their death, the life estate interest terminates, and the ownership of the real property reverts to the “remainderman” as specified by the instrument that initially created the life estate, or by operation of law if there is no specification.

Life estates are generally used when dealing with real estate, such as a family home. The person who “owns” the life estate is called a “life tenant,” and they have the right to sell or give the life estate anyone. However, the life estate will still terminate at the death of the original life tenant.

A life tenant retains full control of the estate during their lifetime. This means that they have the right to rent out the property, make changes as they see fit, and live in the property at their discretion. However, such a privilege comes with the legal responsibility to maintain the property. If the life tenant should be unable to maintain the property or keep up with the property taxes and want to sell it, they can only do so with the permission of the remaindermen. The remaindermen would have to sign off on the papers to sell the property, and would be entitled to a portion of the proceeds. The allocation of the proceeds of sale between the life tenant and the remainderman will depend upon the age of the life tenant.  A younger life tenant will receive a larger allocation because of the longer life expectancy of the life tenant.  An older life tenant will receive a smaller allocation because of the shorter life expectancy of the life tenant.

What is the Purpose of a Life Estate?

A life estate is commonly granted to a surviving spouse in a second marriage to give the surviving spouse the absolute right to use and occupy a residence for the remainder of the lifetime of the surviving spouse, with the remainder interest being granted to the children of the spouse that has died.  By using the life estate for this purpose, the deceased spouse can protect his or her spouse’s right to use the residence, while still providing for the ultimate distribution of the residence to his or her children at the death of the surviving spouse.

Consult a Renton Life Estate Planning Lawyer

At the Renton Law Offices of Dan Kellogg, our estate planning lawyer can guide you on the best estate planning tools for your particular needs.Creation of a life estate can be a useful tool in the appropriate circumstances.  Contact our Renton law firm to learn more about how a life estate can serve you, (425) 227-8700.