Life Estates

By
Real Estate Agent with Coastal Properties Group International

Inheritances can often lead to nasty family disputes. Many times a person will remarry late in life - which leads to who will inherit the family home. Often this is solved by leaving the second spouse a "Life Estate". This means that the spouse can continue living in the home as long as possible, until death. At that point, the "remaindermen" take title and thus inherit the property.

It's difficult to sell a life estate, because the term depends on the life of the person first granted the life estate. Neither is the remainder easy to sell, since the purchaser would not be able to take posession until the life estate holder dies.

Be sure you, your title company or your attorney checks thoroughly to see if a property is subject to a life estate. 

Posted by

Sharon Simms
CIPS CRS CLHMS CRB RSPS
Coastal Properties Group
CHRISTIE'S International Real Estate
238 Beach Drive NE
St Petersburg, FL 33701
www.ssimms.com    www.coastalpgi.com   www.christiesrealestate.com
(727) 898-2582    Sharon@SimmsTeam.com

 

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Rainmaker
859,880
David Spencer
Keller Williams Team Realty - Bloomingdale, IL
Chicago Area Commercial-Residential R.E.
Its not funny, but I had a life estate based on a bird (a parrot). Laws don't permit such a flippant choice, but it complicates the process. Parrots can live to 80 years of age.
Feb 29, 2008 09:17 PM #1
Ambassador
2,496,505
Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital
Sharon, a little old lady who lived down the street from me for years had a life estate.  She recently died in her 90's and sharp as a tack.  I think she outlived the nasty step-nephew remainderman guy, and that gave her great pleasure - all of these nasty relatives of her late 4th husband were just waiting for her to kick the bucket!  She lived even longer than a parrot!
Feb 29, 2008 09:59 PM #2
Rainmaker
536,486
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Sharon,

The last time I dealt with a life-estate it was a sticky issue at best. The mom re-married (short-time only) died and left the middle-age husband the life estate. The grown kids made an offer to buy him out, they paid him (out of the proceeds) to leave, he agreed, it closed.

Feb 29, 2008 11:42 PM #3
Rainmaker
574,889
Neal Bloom
Keller Williams Properties, Weston FL - Weston, FL
Realtor CRS-Weston FL Real Estate
Good question Sharon...never thought of that. We have many probates that take time to determine who actually owns the property or inherited it...not sure it falls near the same category. Doesn't seem to make sense to buy one if you can't own it right away,how does one buy it if they can't own it until the person dies?
Mar 01, 2008 06:52 AM #4
Rainmaker
531,010
Kevin J. May
Florida Supreme Realty - Hobe Sound, FL
Serving the Treasure & Paradise Coasts of Florida
There's probably a fair amount of them out there from the original reverse mortgages of years ago.  Excellent reminder to keep vigilant.  Thanks Sharon. 
Mar 01, 2008 08:35 AM #5
Rainmaker
913,929
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate
Sharon this is interesting info. In 22 years I have never dealt with a life estate. They must not be all that common?
Mar 01, 2008 12:44 PM #6
Rainmaker
605,919
Sharon Simms
Coastal Properties Group International - Saint Petersburg, FL
St. Pete FL - CRS CIPS CLHMS RSPS

David - I hadn't heard of that one. Was part of the deal that you had to take care of the parrot?

Patricia - good for her! In her case, the life estate served its purpose - it kept the remainderman step-nephew from throwing her out - bet he wouldn't have put her in the best assisted living facility, either.

Lynda - That was an effective way to handle it. It's good for the kids that the husband wanted money more than staying in the house.

Neal - there really isn't much of a market for selling a remainder interest. Usually it's just a way of insuring that the surviving spouse can stay there as long as wanted/able but the estate goes to the heirs. Often used for second marriages. If one were to buy it, it would be probably be based on actuarial odds of life expectancy, unless a neighbor or friend knew the life estate holder had a terminal illness.

Bill - they aren't common, but neither are they rare. I've run into some of them - perhaps more here in Florida due to retirement and second marriages. None of the ones I've dealt with have involved a sale of the remainder interest, though when the life estate holder moves out to a nursing home, and the property goes to the remainder, often a child of the grantor, I have then listed and sold the property.

Mar 04, 2008 06:25 AM #7
Rainmaker
605,919
Sharon Simms
Coastal Properties Group International - Saint Petersburg, FL
St. Pete FL - CRS CIPS CLHMS RSPS
Kevin - I hadn't thought of relating them to reverse mortgages. Guess the ones I've dealt with were from before reverse mortgages became popular.
Mar 04, 2008 06:30 AM #8
Rainmaker
624,735
Randy Prothero
Island Style Realty Inc. - Mililani, HI
Hawaii REALTOR, (808) 384-5645
I have not had a life estate come up yet.  It is something that has been covered extensively in our classes, so hopefully I am prepared for it.
Mar 05, 2008 11:54 PM #9
Rainer
130,493
Billnulls Blog Florida Realty Professional
Charles Rutenberg Realty - Clearwater, FL
AHWD

Sharon - I have never had to deal with this one (yet) but thanks for making me aware of it!!!

Mar 06, 2008 06:26 PM #10
Rainer
153,983
Sasha Miletic - Windsor Real Estate
RE/MAX Preferred Realty Ltd. - Windsor, ON

Hi Sharon,  What  a great  post.  Luckily I  haven't dealt with it  yet but THANKS for the heads up and great article.  I'll be researching it a little  more thoroughly.  Best, - Sash

Mar 07, 2008 11:22 AM #11
Rainmaker
605,919
Sharon Simms
Coastal Properties Group International - Saint Petersburg, FL
St. Pete FL - CRS CIPS CLHMS RSPS

Randy - I'm sure you're prepared for whatever comes your way.

Barbara Jo - usually the property doesn't go up for sale while the life estate is in effect, so it's unlikely to be an issue. Once the life estate holder has moved out, it's fine for the remainderman to sell the property as a normal fee simple.

Sasha - thanks. Forewarned is forearmed. 

Mar 07, 2008 06:13 PM #12
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