New York Real Estate & Estate Planning Blog

Monday, October 26, 2015

What is a Life Estate?

A life estate is a special designation in probate law referring to a gift to a family member that lasts as long as the life of the recipient. If an individual uses a life estate as part of his or her estate plan, whatever is bequeathed under the life estate will revert back to the residual estate upon the death of the life estate recipient. It is most common in scenarios where an individual starts a new family without children later in life and wants to ensure that the present spouse is taken care of for the remainder of her or his life. The owner of a life estate is called a life tenant. A life estate is often used as an alternative to a trust because it provides the life tenant with more control over the transferred asset.

A life tenant may treat an asset as his or her own. A home may be rented to tenants for income. The life tenant may sell his or her interest in the property to the heirs of the residual estate or to third parties. If the property is sold to a third party, that third party must surrender the property to the residual heirs upon the death of the life tenant.

Though the property belongs to the life tenant, the life tenant has a duty to the residual heirs to keep the property reasonably maintained and in good condition. He or she has an obligation to avoid mortgage arrearages and tax liens while in possession of the property. Exploiting natural resources on the property may be restricted during a life tenancy. A life tenant may not bequeath his or her interest in a life estate through a will because that interest immediately terminates upon the life tenant’s death. Significant changes to the property need to be agreed upon by all parties.

Though there are benefits, there are also drawbacks to establishing a life estate as part of an estate plan. The action could create estate tax issues for the tenant’s estate. In addition, creditors of the tenant may attach liens on the property, creating complicated legal issues for the heirs of the residual estate.


Archived Posts

2017
2016
2015
December
November
October
September
August
July
June
May
April
March
February
January
2014


John P. Rosenblatt, Attorney at Law assists clients in Nassau County, Suffolk County, the Five Boroughs, the NY Metro Area, Westchester County, Putnam County, Orange County, Dutchess County and Rockland County.



© 2024 John P. Rosenblatt, P.C., Attorney at Law | Attorney Advertising
1800 Walt Whitman Road, Suite 152, Melville, NY 11747
| Phone: 631-753-5252

Residential Real Estate | Commercial Real Estate | Estate Planning | Estate Planning for High Net Worth Individuals | Planning for Children | Guardianships | Probate & Estate Administration | Business Law | Business Succession Planning |

-
-