Real Estate PL Topic - Life Estate

Life Estate

A life estate is a freehold estate limited in duration to either the life of the holder of the estate or the life of some other designated person or persons.

Unlike other freehold estates, a life estate based on the life of the holder of the estate is not inheritable. It passes to the future owner according to the provisions by which the life estate was created.

Life Tenant

The holder of a life estate is called a life tenant. A life tenant is not a renter like a tenant associated with a lease. A life tenant is entitled to the rights of ownership and can benefit from both possession and ordinary use, and profits arising from ownership, just as if the individual were a fee simple owner. The life tenant’s ownership may be sold, mortgaged, or leased, but it is always subject to the finite limitation of the life estate.

Pur Autre Vie

A life estate may also be based on the lifetime of a person other than the life tenant. Although a life estate is not considered an estate of inheritance, a life estate pur autre vie (for the life of another) provides for inheritance of the property right by the life tenant’s heirs, but the right exists only until the death of the identified person or persons. A life estate pur autre vie is often created for people who are physically or mentally incapacitated in the hope of providing incentive for someone to care for them. More than one person could be identified as the measuring life; for instance, a life estate could be granted to a surviving brother by a deceased property owner for the life of the surviving brother’s children. As long as one of the children survives, the life estate is in control of the life tenant or the life tenant’s successor.

Remainder and Reversion

The fee simple owner who creates a life estate must plan for its future ownership. When the life estate ends, it is replaced by a fee simple estate. The future owner of the fee simple estate may be designated in one of two ways:

• Remainder interest – The creator of the life estate may name a remainderman as the person to whom the property will pass when the life estate ends.
• Reversionary interest – The creator of the life estate may choose not to name a remainderman. In that case, ownership returns to the original owner upon the end of the life estate.

Watch this video to review.