Does A Life Estate Override A Will?

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“Does a life estate override a will? When a person acquires a life estate in a piece of property, they are guaranteed to have the right to use and occupy it for the rest of their lives. Usually, life estates pass by deed or will, giving the holder the right to preserve the property’s value.”

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Does A Life Estate Override A Will?

Does a life estate override a will? A life estate can override a Will in some cases. A property passes to the remainderman named in the deed or Will after the holder passes away. A life estate may end upon death if it is not expressly stated in the Will that it will terminate.

Regardless of whether the Will provides instructions regarding the distribution of property, the life estate will continue, and nothing will proceed according to the Will. It is essential to understand the power of a life estate.

Individuals can often use this technique to prevent their family members from inheriting property they do not wish to pass on.

 

Life Estate: What Is It?

An estate plan involves transferring ownership of a portion of the property to someone else, called a life tenant, through various legal documents.

Life tenants are entitled to reside in and utilize the assets or property for as long as they live. Upon the life tenant’s death, the beneficiary, known as the remainder owner, will own the entire property. Real estate properties often come with these arrangements, but they can also be helpful in other types of real estate.

In a life estate, the remaining owner and life tenant share different rights and responsibilities as part of joint ownership. While the remainder owner is the ultimate owner of the assets, the life tenant has the right to live in and use them. Without the consent of the remainder owner, the life tenant does not have the power to sell or give full ownership of the assets.

Despite giving the life tenant control and use of the property, establishing a life estate is considered a gift to the remainder owner. Planning an estate allows you to transfer assets or property more smoothly without undergoing probate, which may benefit beneficiaries or heirs.

Speaking to a lawyer about a life estate’s legal implications and documentation is essential for specific estate planning requirements and objectives.

 

Here’s How It Works

Life estates create two parties in the property:

  1. Tenant for life.
  2. Also known as the beneficiary, the remainder owner owns the remainder of the property.

The following are each party’s rights and responsibilities:

 

A Life Tenant

  • Ultimately, they own the property and can use it as long as they choose.
  • Life tenants can be joint tenants or sole tenants.
  • Property maintenance and insurance are their responsibilities.
  • Renting the property could generate income for them.

 

Owner of the Remainder

  • In the case of a living life tenant, they are not responsible for maintaining the property.
  • There is no right for them to collect or utilize the income generated by the property.
  • A life tenant’s death automatically makes them the owner, legally and instantly.

 

Life Estate Benefits

In many circumstances, a life estate can be beneficial, and it offers the following advantages:

  • Benefits and Costs: Creating a life estate is easy, cheap, and fast. Transferring the title after death is also simple.
  • Probate Avoidance: When the last life tenant dies, heirs can legally own the property if they have a life estate in California.
  • Benefits for the Life Tenant: The life estate protects the life tenant’s right to use the property and resides in it during their lifetime, regardless of the owner’s remaining financial issues.
  • Benefits of a Life Estate: If a life estate exists upon the grantor’s death, the heirs will have a different capital gains tax basis.

 

The Drawbacks of a Life Estate

To make the most of your life estate, you should speak with a lawyer before establishing it. There are several possible disadvantages to creating a life estate, including:

 

Consequences of Taxation

If the life tenant sells the property while alive, they may face income tax penalties. The owners won’t get tax exemptions if the personal property goes up for sale. Life tenants don’t get a whole income tax exemption when personal property gets sold. As a result, the owner must pay tax on the remaining sale proceeds if any capital gains are outstanding.

 

Continuity

When a property passes to a life estate, it is permanent. It is possible to alter the terms if the remainder owner and the life tenant agree. If the life estate was established while the grantor was alive, the grantor gave up their ownership rights.

 

Difficult To Sell

A buyer may be hesitant to buy a property with a life estate if they have life rights to the house, including the ability to live there and rent it out.

 

Dissolving a Life Estate

Dissolving a life estate effectively requires several steps, and they are as follows:

  • Be aware of your rights and responsibilities
  • Choose a method for transferring ownership
  • Plans that affect you
  • Please inform all parties involved

 

An Estate’s Reversal

Life estate deeds are legal documents that transfer a property’s title. Reversing a life estate deed requires consent from the life tenant and the remaining owner. You are not able to change it on your own.

 

Do Life Estates Override Wills?

Does A Life Estate Override A Will? Life estates can override wills but not necessarily, as a will commonly establishes most of the rights a life estate creates. However, the will applies only upon the testator’s death, so a life estate can only override the will if the testator is alive.

 

Do Life Estates Override Wills?

 

The life estate is void upon the life tenant’s death, so the property reverts to the remainder owner after the life tenant’s passing. As a result, a life estate can override a will in some cases. Usually, this will happen when the will does not categorically state that the life estate is to terminate upon the death of the remainder owner. The will is still valid without a life estate clause, and the property shouldn’t pass according to it.

 

Are Life Estates Evictable?

Despite the existence of a life estate, it is possible to evict someone with it, provided certain conditions exist. The first condition is that the life estate must be of a specific duration, not indefinite.

As a second requirement, the life estate agreement must specify the reason for the eviction. Additionally, these conditions exist to evict someone with a life estate. Finally, the eviction must occur according to the procedures specified in the agreement.

 

Conventional Life Estates: How Are They Created?

Typically, a life estate arises through a deed, a will, or a trust, with the life tenant having an ongoing right to use the property during their lifetimes, with the remainder interest going to one or more remaindermen.

Remaindermen do not have the right to sell, mortgage, or otherwise transfer their interest. Once a life tenant dies, the property will go to the remaindermen named by the life tenant.

 

What Are Some Examples Of Life Estate Clauses In Wills?

Life estate provisions in a will are examples of testamentary dispositions. A testamentary disposition is when the property is disposed of by will or some other instrument upon the testator’s death.

It is possible to create a life estate clause within a will to give someone the right to use a property during their lifetime and then return it to the testator’s estate afterward. Life estates have a clause in the contract that specifies the duration of their existence, which can be a fixed term or the owner’s lifetime.

Life estate clauses allow the testator to retain full ownership of the property while allowing others to use it during their lifetime. If a testator dies without naming someone to receive a life estate, then the estate of the testator will maintain ownership of the property.

As a result, the life estate clause provides that it will pass to those persons named in it as remaindermen rather than passing to other family members. An individual who receives a life estate without being named in a testator’s will does not become the testator’s heir. Instead, they become the remaindermen according to the testator’s wishes.

 

What Is The Ownership Of A Life Estate?

When a life estate exists, a life tenant owns and occupies the property throughout their lifetime. Despite owning an interest, the remainderman only takes complete control and possession once the life tenant dies.

Hence, while the life tenant is alive, the property is theirs to use and possess. However, the remainderman is the ultimate owner who awaits activation of their full rights after the life tenant passes away.

 

Does A Life Estate Have To Pay Property Taxes?

As part of a life estate, the life tenant typically pays and maintains the property taxes. Life tenants who fail to pay property taxes can potentially lose their property to remaindermen.

Hence, they have a vested interest in tax payments. The life estate agreement may, however, make specific arrangements differently. Therefore, it’s essential to consult the agreement’s terms or applicable local laws.

 

Is It Possible For Someone With A Life Estate To Sell The Property?

It is the right of a life estate holder, called a life tenant, to use the property and live there as long as they live. If they want to sell the property, they can sell the life estate interest. In any case, they cannot sell the entire property without the remainderman’s permission.

Let’s say that the life tenant sells their interest in the life estate. A new property owner could only use it if the original tenant occupied it. Even after a life tenant dies, the remainderman will still hold full ownership of the property.

 

Removing Someone from a Life Estate

The process of removing someone from a life estate takes work. Sometimes, the method will depend on the circumstances and the jurisdiction. Here are some techniques for removing someone from a life estate:

 

Mutual Agreement:

Life tenants can terminate their life estates by transferring their interest back to the remainderman or another party, which is the simplest way to end their estate.

 

Buyout:

Alternatively, the remainderman (or another interested party) may offer to buy out the life tenant’s interest. This would effectively end the life estate.

 

Merger:

Life estates merge with remainder interests when the same person acquires them; for example, if the remainderman acquired the life tenant’s interest, the life estate merges with the remainder interest, and the property becomes wholly owned in fee simple by the remainderman.

 

Legal Action:

A remainderman may take legal action to terminate the life estate if the life tenant fails to comply with the conditions of the lease (such as failing to maintain the property or pay taxes).

 

Natural Termination:

There is no option to remove a life estate unless there is a contract or a breach. Waiting might be the only viable option without agreement or breach.

 

Check the Original Agreement:

Terminating provisions or conditions in the agreement or deed that established the life estate may exist. You should read through the document carefully to understand such provisions.

 

Life Tenants: What Happens if They Move Out?

When a life tenant leaves a property associated with a life estate:

 

Continuity of Life Estate:

Life tenants retain their rights to the property even after moving out. If they stop living on the property, they still have their rights to the property until they die.

 

Leasing or Rental:

In many jurisdictions, the life tenant has the right to rent the property and collect rent unless a court order prohibits it.

 

Taxes and Maintenance:

Life tenants are usually responsible for property taxes, insurance, and maintenance. This is true even after they move out. It is to keep the property in good shape. The remainderman might be able to challenge the life tenant’s rights if they fail to fulfill these responsibilities.

 

Life Tenant Returns to Property:

It is generally true that a life tenant may return to a property at any time unless they have legally terminated their interest in the property.

 

Transfer or sale:

It’s only possible for the life tenant to sell the entire property with the remainderman’s consent. However, the life tenant can sell his interest in the property, but the buyer will only have access to the property during the life of the original tenant.

 

Merger:

The life tenant can acquire the remainder interest if the remainderman sells or transfers it to him (for example, if he sells it or transfers it to the remainderman). The life estate will merge with the remainder interest, resulting in the life tenant owning the property outright.

 

Conclusion

Moreover, life estates are an effective way to handle taxes, avoid probate, and meet other estate planning requirements. These trusts allow individuals to pass on their property to their beneficiaries while maintaining the right to live there.

Even so, life estates are generally irrevocable, and a life tenant must get the approval of the remainder owner before borrowing or selling the property. Any changes with the life tenant need the approval of the remainder owner.

 

Hedy Ghavidel

HEDY GHAVIDEL Managing Partner  Roseville Office  1-866-471-6981  info@attorneysre.com Bio...

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