A life estate pur autre vie is inheritable only if the life tenant dies before the third party on whose life the estate is based. There are two types of voluntary life estates: Life estate in reversion – one in which ownership of the fee estate reverts to the GRANTOR or his/her heirs upon the death of the life tenant.
What is an example of life estate?
A life estate is an estate interest in land that lasts for the life of the life tenant. The holder of a life estate has a full right to possess the property during their life. A common example of a life estate is when a parent transfers a property to a child for the life of the child (or visa versa).
What are life estates created by?
A life estate is created by a deed that gives the land to the person “for life” and identifies what should happen to it after that person dies. For example, a deed stating that land would go “to John Doe for life, then to Jane Doe” gives John a valid life estate, and Jane a remainder.
What do you need to know about a life estate?
Using a life estate deed as a way to protect real estate from long-term care costs has been a common planning technique for decades. A life estate deed typically works like this: parents sign a deed transferring their home to their children for nominal consideration (i.e. $1.00).
What happens to the remainder of a life estate?
But when the life tenant dies, the remainder interest in the property goes to the beneficiary, also known as the remainderman. Often a parent might create a life estate in order to give their house to their child but retain control over it during the parent’s lifetime.
How is the interest on a life estate measured?
One interest is measured based on the owner’s lifetime and is called a life estate. The interest that passes at the owner’s death is called a remainder or remainder interest. The life estate and remainder interest are then transferred to different owners. There are three categories of owners:
What are the drawbacks of a life estate?
If property is subject to a life estate, this can adversely affect financing on the property. The life tenant could get stuck with the remainderman’s heirs. It’s possible that the remainderman could unexpectedly die before the life tenant. Shouldthat happen, the remainder interest would pass to the remainderman’s heirs.
