My dad’s Will says I get a “Life Estate” in a house when he dies. What does that mean?by William J. Sweeney on 04/28/15
(Mr. Sweeney is an attorney licensed in California. The comments below are not intended as legal advice for any specific situation and may not accurately reflect the law in other jurisdictions. There may have been changes in the law since this was written. You should always consult an attorney in your own jurisdiction.)
Generally speaking, a “Life Estate” means the house (or other property) is deeded to you for your life (you would typically be called the “Life Tenant”), and on your death, the interest in the property vests in someone else (typically called the “Remainderman”).
It is possible the measuring life could be someone else. For example, lets say your father-in-law left a home to you and your wife (his daughter), for her life. If she dies before you, you would lose the house and the property would pass to whoever he named as remainderman.
While you are the life tenant you have control of the house and theoretically even have the right to sell it. I say “theoretically” because you can only sell what you have, and there isn’t going to be much interest in purchasing a house when the buyer knows that as soon as a specific person dies, they lose the house. They might have it for years, or could lose it in a few days.
What I see more frequently is an older parent who transfers a home to a child and retains a life estate. That way they still have the home for their life and on their death, full title passes to the child. This is NOT something you do without getting legal advice.
There can be tax issues, creditor issues and also other considerations if someone is on MediCal (Medicaid). Always consult a knowledgeable attorney before creating a Life Estate so you know what you are getting into.
William J. Sweeney
Attorney at Law
915 Highland Pointe Dr., Ste. 250
Roseville, CA 95678