Life estates how do they work?

6 Replies

I do not have much experience with life estates. Would it be possible for a homeowner to give me a life estate remainder interest in their property for some sort of valuable consideration? Is consideration even needed? Would this function like a traditional sale?

I come across many properties where the owners would like to stay in their homes until end of life. This is great however then the property needs to go through probate in order to be disposed of. 

I believe that consideration is needed (can be as little as $1). I would go to an attorney who specializes in estate planning to draft a correct life estate deed. There are multiple pros and cons so make sure to do your due diligence prior entering into a life estate deed! 

@Rich Hupper   I'm not an attorney and you need one to work through this.

My understanding is that you can buy the seller's property and give them a life estate - not the other way around.

That means that you take ownership of the property but the seller can live there until they die.

The thing that creeps me out about this is that you now have a pretty strong motive for putting a hit out on the seller.  If anything weird happened and the seller did not survive, you would be suspect #1.

The other thing that gives me the heebee jeebies is that you're essentially betting on how long you think the seller will live.  That feels wrong. I just don't like the idea of betting on when another person is going to die. Maybe it's just me.

To your other question, every contract has three basic elements - offer, acceptance of the offer and consideration (something of value changes hands).  There are others, such as properly identifying the parties to the contract, a meeting of the minds, etc.  But I think consideration is key.

I am trying   understand the mechanics of this not bet on someone living or dying.   

In a life estate you would take title to the property, but have the recorded deed give the seller, or whoever, the right to live in the house for their life.

In some states there are transfer on death deeds available.  However, they are generally revocable at will, so don't pay someone and expect them to not revoke it.

Originally posted by @Lynnette E. :

In a life estate you would take title to the property, but have the recorded deed give the seller, or whoever, the right to live in the house for their life.

In some states there are transfer on death deeds available.  However, they are generally revocable at will, so don't pay someone and expect them to not revoke it.

Thank you