Property ownership can involve complex transactions. Often, property involves current and future interests. A life estate is a current interest; whoever holds that interest can use and enjoy the property for life. When that person dies, whoever has the future interest takes over. In general, a life estate cannot be changed after the life-estate holder dies.
Property Ownership
Property ownership is often thought of as a bundle of sticks; each stick represents a certain right. If a person holds the entire bundle, he owns the property outright and can sell, transfer or otherwise gift his interest in the land as he sees fit. Outright ownership is known as "fee simple." The outright owner can control who has title to the land; he might do this by giving a life estate in the property and naming heirs to inherit after the life estate owner dies.
Life Estates and Uses
As its name suggests, a life estate only lasts for the duration of some person's life. Life estates are commonly used in estate planning. A married couple may state that when one spouse passes away, the surviving spouse has a life estate in the marital home; when the surviving spouse passes away, the title would then transfer to their children or some other beneficiary. The language in the will might be similar to "I give the marital home to my wife for the duration of her life and then to my children." Even if the surviving wife later sells or otherwise transfers her interest in the property, when she dies the interest ends and her children are the owners of the house.
Other Examples
Estate planning is a common use for a life estate, but it is not limited to that. For instance, John may own Blackacre in fee simple but through a sale he could deed the property to a friend, Jan, and give her a life estate while retaining the future interest. When Jan dies, the property would revert back to John. If Jan sold the property, she could only sell her life interest; once Jan dies, the property would revert automatically back to John, even if the current "owner" (the person who bought the interest from Jan) was still living on the land.
Other Issues
Owning a life estate involves potential legal issues. For instance, the life estate holder cannot do something to the property that would reduce its worth or value for the future owners. Because a life estate automatically ends when the life estate holder dies, a person who wants to change that particular interest must do so while the life estate holder is still living. Due to the legal nature involved with property interests, readers should seek the assistance of an attorney before proceeding.
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