What is a Life Estate?

You may know of someone with “life rights” to a property. They are known as life tenants, and the persons involved have the right to occupy and use their property for the rest of their lives. This is known as a life estate. While they enjoy the benefits of the property that any owner would, there are limitations. Life tenants cannot sell or transfer the property, or mortgage the property in their own names. Life estates are usually irrevocable once put into place. They are an estate planning tool that helps avoid probate when the life tenants die. At the life tenant’s death, the beneficiary files the death certificate in the local land office and receives title to the property. A life estate deed avoids the gift tax that would occur if a parent signed over their home to their children during their lifetime. The life tenant does not include their property in their will since the life estate deed establishes the owner of the property.

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