There are many estate planning terms that you hear thrown around, and it can be confusing to figure out what they mean at times. Before you purchase a piece of property to live in, or even after you’ve been in your own house for a while, you might consider having a life estate. But what exactly is a life estate?
Defining a life estate
This is defined as a property that someone owns and usually resides in, when they are known as the life tenant and share ownership with another individual who will take over ownership upon the life tenant’s death. They are known as a remainderman, and they automatically receive the title to the property once this happens.
The legal particulars of a life estate
The life estate is a means of having a joint homeownership. The remainderman cannot take possession of the property until the life tenant passes away. The life tenant can live in the property, but they can’t take any legal action with the property, such as selling it, unless the remainderman agrees to this. A deed document details the joint ownership terms and makes it so that the automatic transfer of ownership doesn’t need to be included in the individual’s will.
Ways to set up a life estate
There are a few methods by which you can create a life estate. One of the more common ways is to consult an attorney about your wishes to do so. You also might draft the deed yourself. Either way, you need to make sure it’s filed with the county for it to be valid.
Many people find it valuable and of great benefit to set up a life estate. This can create an income stream and avoid the headache and long wait that often happens with a will or other ways of transferring property. Consider making the next house you purchase a life estate.