what is a life estate 
a life estate is a property usually a residence that an individual owns and may use for the duration of their lifetime this person is called the life tenant and shares ownership of the property with a second person the second person is referred to as the remainderman and automatically receives the title to the property upon the life tenant s death homeowners most often create life estates in the u s to ensure that the next generation will eventually get the family home and avoid probate the legal process of proving a will distributing assets paying creditors and settling an estate these are known as interest in possession trusts in the u k and they dictate the distribution of trust income understanding a life estatea life estate is a form of joint homeownership shared between a life tenant and a remainderman the remainderman has an ownership interest but can t take possession until the life tenant s death the life tenant can live in the home but can t sell it or mortgage it without the agreement of the remainderman 1a life estate is established with a deed that states that the occupant of the property is allowed to use it for the duration of their life the deed will also name the individual who will receive the property after the life tenant s death a homebuyer can arrange a life tenancy with an elderly homeowner in france and pay that person a regular income in return for being named as the designated remainderman this is called a viager the life estate deed within a life estate is a document that grants the owner the ability to pass on ownership of a property without including it in a will as part of their estate assets the property doesn t have to go through probate the court process that s used to distribute bequests and settle an estate as a result the probate process can be costly and complicated particularly when an estate is very substantial or unusually complex the life tenant s interest in the property ends at death and ownership is transferred to the remainderman the life tenant is the property owner for life and is responsible for costs such as property taxes insurance and maintenance the life tenant also retains any tax benefits of homeownership life insurance as an income streama life estate is usually created to streamline the transfer of homeownership to the next generation but it can also be used to establish an income stream life estates can be created to provide a life long income for a person rather than a lump sum inheritance the estate consists of money invested in income producing instruments in this case such as bonds oil and gas leases and real estate investment trusts reits the life tenant receives income for life under this arrangement but they can t access the principal amount the life tenant can t sell any property that s involved in a life estate or borrow money against it without the agreement of the remainderman the remainderman could demand a portion of the proceeds based on a predetermined scale that reflects the life tenant s age and current interest rates if they both agree to the sale the remainderman can typically expect to receive a greater share as the life tenant ages 