A Life Estate is an interest in real property that terminates upon the death of a specified person, usually the owner of the Life Estate. There are some terms that are unique to life estates. The owner of a life estate is often called a “life tenant.” The life tenant has the right to reside in the home for life or for so long as he or she may choose. Upon the termination of the life estate the persons who obtain full fee simple ownership of the real property are called “remaindermen.” A life tenant may live in the property but cannot sell it without the consent of the remaindermen. A life tenant must respect the property and do nothing that would decrease its value.
A life Estate is usually created by use of a deed that specifically reserves the life estate. The deed also can specify the conditions upon which the life estate is granted. A life tenant may have the responsibility for maintenance, taxes, insurance and other costs connected with the property for so long as he or she resides there.
One benefit of a life estate is that it allows a person—often an elderly person—to sell their home (usually to a family member), generate cash to live on and still reside in the home for life.
Another benefit of a life estate is that the home passes to the remaindermen automatically upon the death of the life tenant. No probate is needed.
Our firm has utilized this device as a means to settle disputes over real property.
Life estates can also be helpful in planning for Medicaid eligibility. But like any other tool, it must be used appropriately. Under some circumstances gift taxes may apply. Consult with your Phoenix Estate Planning Attorney and CPA to learn if a life estate may be of benefit to you.
The lawyers at Platt and Westby, P.C. have been practicing in the area of Probate and Estate Planning and Administration for over 40 years. Contact any of our Probate lawyers at 602-277-4441 or use the e-mail contact utility on our website at www.plattwestby.com to schedule a no-fee initial conference concerning any Probate or Estate Planning matter. We will answer your questions and, where appropriate, suggest potential solutions.
Platt and Westby, P.C. has offices in Phoenix, Arrowhead, Avondale, Scottsdale and Gilbert, Arizona.