What Is a Life Estate?
A life estate is property, usually a residence, that an individual owns and may use for the duration of their lifetime. This person, called the life tenant, shares ownership of the property with another person or persons, who will automatically receive the title to the property upon the death of the life tenant.
In the U.S., life estates are most often created by homeowners to ensure that the next generation eventually gets the family home while avoiding probate, the legal process of proving a will.
Understanding a Life Estate
A life estate is a form of joint homeownership. Ownership is shared between a life tenant and a so-called “remainderman.” As the name suggests, the remainderman has an ownership interest but cannot take possession until the death of the life tenant. The life tenant may live in the home but may not sell it or mortgage it without the agreement of the
The life estate is established with a deed that states that the occupant(s) of the property is allowed to use it for the duration of their lives. The deed will also name the person who will receive the property after the death of the life tenant.
In the U.S., the creation of a life estate is usually a part of estate planning. However, depending on the country, it can serve other purposes. For example, in France, a homebuyer can arrange a life tenancy with an elderly homeowner and pay that person a regular income in return for being named as the designated remainderman. The process functions as a private reverse mortgage—a practice that dates back to the 9th century.
