Life Estates: Yes, they are very much alive!
November 25, 2019


Regular readers of my blog may be surprised that I am actually writing this month’s blog on a legal topic.  Interestingly, throughout my legal career, I have had very little occasion to use Life Estates in estate planning.

However, lately this has changed.  The main reason appears to be blended families.  Many people in the United States have gone through divorce, and then subsequently remarry.  At the time of remarriage, the spouses can decide whether to gift an interest in real estate to the new spouse, or to retain ownership as the property was owned at the time of marriage.  Interestingly, the question becomes “what becomes of the real estate at death?”  More and more, the ownership spouse will determine that the residential real estate should go to her children.

The problem arises as what to do about the surviving spouse that does not have ownership interest in the residential real estate.  The answer is the Life Estate.  This means that the surviving spouse who would not otherwise have an ownership interest, is granted an estate for her remaining life.  Also, the Life Estate can require that the surviving spouse to maintain the property, including mortgage payments, insurance and real estate taxes.  Inherent in this financial responsibility would be a duty to take care of landscape expenses and regular maintenance on the exterior and interior of the residential property.  This is to preserve the residuary estate for the children who expect to own the property at the death of the surviving spouse.

One other nuance in this process is whether or not the contents of that house are also part of the Life Estate.  The careful drafter should consider this because there may be an expectation on the part of the surviving children that they can remove the contents, thus leaving the surviving spouse with a house with little functionality.  The better practice may be to also reserve a Life Estate in the contents, so that the surviving spouse has the use of the furnishings during the period of time of the Life Estate.

If you have questions about estate planning, particularly in situations with second marriages, please feel free to contact me at (717) 724-9821 or sminer@daleyzucker.com




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