What You Should Know About Life Estates in Florida
This article will give you an overview on what you should know about life estates in Florida. What is a life estate? A life estate is a legal interest in real property that lasts during the life of the person with interest or another life in being. A life estate is not outright ownership in the property, only the use of the property for a specified life in being. The person who has a life estate is most commonly referred to as the life tenant. Upon the death of the life tenant, the real property is passed to named beneficiaries, which are referred to as remaindermen. A life estate can be created by deed, trust, or a will.
Benefits of Creating a Life Estate
While there are other more commonly used conveyances of property interests, life estates may be a suitable instrument in certain situations. Here are some examples where creating a life estate is a good solution:
Allowing a surviving spouse to remain in a shared home. Husband has grown children from a previous marriage but wishes for his wife (not the mother of the children) to remain in the home for the rest of her life. In this scenario, the husband can create a life estate for the wife, with a remainder to the grown children.
Provision for a child with special needs. In our next example, a mother has four adult children, one of which is a special needs child and lives with her at home. Mother’s wishes are that in the event of her death, her special needs child will remain in the home. Additionally, mother wants the house to pass to her other three children. Mother can accomplish this by creating a life estate for her special needs child and make the other three children remaindermen.
Creating a life estate for yourself. In this example, you can convey an interest to yourself in a life estate and name other remiandermen, such as children or other family members. This becomes very useful in situations where eligibility for Medicare is at issue. Basically, the property is transferred to your beneficiaries before you die, and you get to reside in the property for the remainder of your life.
Setting up a life estate can have substantial financial consequences for the life tenant. However, if the life tenant and the remaindermen maintain a positive relationship, they can preserve the property together.
Responsibilities of the Life Tenant
While using the property, a life tenant has certain responsibilities. Since the life tenant is not the true owner in the property, they must take care of the property for the remaindermen. The life tenants maintenance includes such things as needed improvements and general upkeep. Additionally, there may be financial responsibilities for the life tenant such as payment of the mortgage, property taxes, homeowner’s insurance, homeowner’s association dues, and utilities.
The life tenant has no legal right to sell the property. However, the life tenant is able to sell their interest in the property. In such a situation, the purchaser would be allowed to have a life estate in the property for remainder of the life tenant’s life. Additionally, the life tenant may rent or lease the property within his or her life estate.
For the duration of the life tenants life, the remaindermen have no legal right to use or sell the property nor any responsibility as to the property’s maintenance or upkeep. Nevertheless, due to the fact that the remiandermen have a future interest in the property, their creditors have the ability to attach liens on the property and execute those liens preceding the life tenant’s death.
Now that you can see the relationship between the remaindermen and a life tenant, it is easy to understand how conflict can easily arise. Since the remaindermen are final owners of the property following the life estate, they may put undue burdens and excessive pressures on the life tenant in maintaining the property. In some cases, the life tenant is just not in a position to be able to meet these expectancies. In other more amicable situations, the remaindermen may invest in the property by making improvements during the life tenants use of the property.
What Happens When the Life Tenant Dies?
Finally, when the life tenant dies, the remaindermen get the property. The passing of the property to the remaindermen can occur without going through probate if an instrument such as a deed or a trust was used to create the life estate. Additionally, a transfer must go through probate. Once the property is passed to the remaindermen, they have ultimate power on how to use the property including selling the property.