A life estate is a type of real property interest that grants someone ownership rights for their lifetime or someone else’s lifetime, and grants a future interest in another person or persons, known as “remainderman” or “remaindermen.” The owner of the life estate, known as the “life tenant,” generally has the right to possess and use the property and receive any profits generated by the property.
Generally, the life tenant may also sell or convey their life estate, but they cannot leave the entire property to someone in their will because in a regular life estate, the life estate ends when the grantee (owner) dies.
If a life estate is conveyed, the purchaser takes the estate subject to the life of the life estate grantee and subject to the rights of the remainderman.
When a life tenant dies under a regular life estate, ownership of the property automatically transfers to the remainderman or remaindermen.
A life estate pur autre vie is a life estate conveyed to someone for the life of someone else. For example, a life estate to a brother for the life of grandmother.
For this reason, life estates can be an excellent estate planning tool, as they allow homeowners to leave their property to the next generation outside of the expensive and time-consuming probate process.
With a traditional life estate, once the deed has been filed, it cannot be revoked or otherwise changed without the written consent of both the life tenant and the remainderman. However, Texas is one of a handful of states that allows people to create an “enhanced life estate.”
Also known as a “Lady Bird Deed,” an enhanced life estate allows the original homeowner, who holds the life estate, to occupy, use, mortgage, or sell the property or change the remainder beneficiaries at any time without the consent of the remaindermen. This allows the homeowner to enjoy the advantages of using a life estate while still maintaining control over the property.
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Pros of a Life Estate
Life estates offer several important advantages. Chief among them, they allow a homeowner to automatically transfer property to the beneficiary of their choice upon death without the need for probate. In Texas, life tenants also remain eligible for homestead and senior property tax exemptions, which can make holding onto a property more affordable.
Life estates can also play a role in Medicaid planning. Because a home transferred at the expiration of a life estate is not considered an asset of the estate, it cannot be reached by creditors through estate recovery. This includes Medicaid estate recovery, which seeks repayment for benefits provided during a person’s lifetime. In certain cases, homeowners can explore options to change the life estate structure, such as using an enhanced life estate (Lady Bird Deed), to keep flexibility while still enjoying these benefits.
Cons of a Life Estate
There are disadvantages to a life estate as well. A traditional life estate restricts the homeowner’s ability to sell, mortgage, or lease the property during their lifetime without the remainderman’s consent. Once the deed has been recorded, it cannot be easily revoked if circumstances change, and it may be difficult to change the life estate terms later.
Another limitation is that a remainderman’s interest is a recognized property right. This means that the property could be affected by creditor claims or liens filed against the remainderman, even while the life tenant is alive. Many Texas homeowners avoid these issues by using a Lady Bird Deed, which permits the life tenant to revoke the remainderman’s interest and keep full control of the property until death.
What are the Two Types of Life Estate?
In Texas, life estates are most commonly created by deed, as discussed above, and through the Texas Estates Code.
The Texas Estates Code allows heirs to receive a life estate in particular circumstances as an operation of law. For instance, under Texas Estates Code Section 201.002, if a person dies without a will, their surviving spouse is entitled to a life estate in one-third of the deceased person’s separate real property, with the remainder going to the person’s children or their children’s descendants.
Who Owns the Property in a Life Estate?
The owner of a traditional life estate maintains certain rights to use the property while transferring future interest of the property to the remainderman that is not vested until the death of the life tenant or another person. However, with a Lady Bird Deed, the homeowner maintains their ownership interest during their lifetime.
Like most estate planning devices, life estates can create complications and disputes between interested parties. For instance, under a traditional life estate, the life tenant has a duty to the remainderman to avoid “waste,” which is the unreasonable or damaging use of the property. When a life tenant commits waste, the remainderman can pursue a civil action against them or if the life tenant is deceased, their estate representative.
Another common dispute between a life tenant and remaindermen is costs related to the property. For example, a life tenant is responsible for the property taxes, insurance, and maintenance of the property. When a life tenant fails to pay those property costs, the remaindermen may seek court intervention related to non-payment.
Does a Life Estate Override a Will?
Yes. In most cases, a life estate will override a will. Once a life estate deed has been properly executed and recorded, the remainderman’s rights are fixed and take priority over any contrary provisions in a will. This means the property cannot later be given to someone else through a will because ownership is already set to pass directly to the remainderman at the life tenant’s death.
Conflicts sometimes arise if heirs believe the life estate was created improperly or under questionable circumstances. In such cases, the matter may have to be resolved through the probate court.
Talk to an Attorney About Life Estates
Life estates can be a useful estate planning tool, but they are not without risks. Understanding how they work, and whether a traditional or enhanced life estate best fits your needs, is essential.
If you are considering creating a life estate or are involved in a dispute over one, you should speak with an experienced probate litigation attorney. At RMO Lawyers, we can help you evaluate your options, protect your rights, and secure the best path forward. Schedule a consultation today to discuss your situation.
Frequently Asked Questions
Generally no—a power of attorney typically cannot change a life estate unless the life estate document or state law specifically authorizes it. Life estates are real property interests, and changes usually require execution of a new deed or agreement, not just a POA directive. However, if the life estate was structured with provisions allowing amendments or if a statutory power allows it, a properly authorized agent might effect change. It’s important to review the life estate deed, state statutes, and consult a real estate or probate attorney before attempting changes.
A traditional life estate grants the life tenant the right to use the property during their life, but restricts their ability to sell or mortgage the property without remainderman’s consent, and the future interest is fixed in the deed. In contrast, an enhanced life estate (often called a Lady Bird Deed) allows the grantor to retain control and flexibility — they can sell, mortgage, or change remaindermen during their life without needing consent. The enhanced form thereby combines many of the benefits of a life estate with the flexibility of full ownership. Because of these distinctions, enhanced life estates are often preferred in states where they are allowed.