There are numerous ways that a person can hold ownership in property. One way is the life estate. If a person holds property in a life estate, he or she retains the right to occupy, possess, and enjoy the property for his or her life. However, when he or she passes on, their interest in the property automatically ends. Due to this automatic end, a life estate holder cannot transfer his or her interest in the property through a will.
Life estates are typically used to keep property from being transferred through probate. If a person wants to transfer his home to his child: 1) without any planning, the home will have to go through the process of probate before ownership could be transferred; OR 2) the homeowner could execute a new deed that reserves a life estate in the home, with a remainder interest to the child. If the deed is executed properly, the home will automatically transfer to the child, upon the parent’s death.
While the parent is alive, he will be required to pay all costs, e.g. property taxes and insurance, as though he is the sole owner. Also, the child who was given the remainder estate does not have any right to the property until the life estate owner dies.
Importantly, a life estate cannot be revoked, once a person sets up his or her ownership of a property in a life estate, he or she cannot sell or otherwise dispose of the home.
So, If you are considering giving someone a life estate think long and hard about it.