How is a Life Estate Created?

Full question:

1 WANT TO SELL MY CONDO TO MY DAUGHTER WITH A COVENANT FOR MY LIFE TENANCY WHAT TYPE OF DEED DO I NEED TO SELL MY CONDO TO MY DAUGHTER. WITH LANGUAGE TO COVER MY LIFE TENANCY

Category: Real Property
Subcategory: Deeds
Date: 04/07/2025
State: Florida

Answer:

That may be accomplished by creating and recording a deed from yourself to your daughter, with a life estate retained by you, assuming you are currently the only owner. If there are joint owners, they would need to sign the deed also. In the case of a life tenant who holds a life estate, when the life tenant dies, their interest may pass to the remaindermen. Title may also return to the person giving or deeding the property or to his/her surviving children or descendants upon the death of the life tenant--this is called "reversion." For example, a parent may deed a home to a child and reserve a life estate as a way of passing the property to the child outside the probate process. This allows the parent to remain in the home while the parent is alive, with the home passing to the child/ remainderman after the life of the parent. Please see the links to the forms below.

Someone with a life estate has a right to the use of the asset in which she or he has a life estate for her or his life. The right can also exist for the life of someone else. The right extends to the use of the asset and the income from it. In the case of a farm, for example, the holder of a life estate, called a life tenant, could farm the land, sell the crops and keep the proceeds. The life tenant could also live in any house on the land. The life tenant will still be responsible for the payment of all taxes, insurance and maintenance on the farm.

A life tenant can sell or mortgage his or her life interest, but the interest sold or mortgaged is limited to the lifetime of the seller or mortgagee. Although the life tenant can sell the life estate, the buyer would have ownership rights only as long as the original life tenant lived.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Do remaindermen get capital gains tax?

Remaindermen may be subject to capital gains tax when they sell the property after the life tenant's death. The basis for calculating capital gains is typically the fair market value of the property at the time of the life tenant's death. This means they might benefit from a step-up in basis, potentially reducing their capital gains tax liability. However, specific tax implications can vary, so consulting a tax professional is advisable for personalized guidance.

How to sell a house with a life estate deed?

To sell a house with a life estate deed, the life tenant must create a new deed that transfers ownership while retaining the life estate. This deed should clearly state the life tenant's rights and the remainderman's future ownership. It's essential to record this deed with the local property records office. Additionally, all parties involved should understand their rights and responsibilities, so consulting with a real estate attorney is recommended.

What are the disadvantages of a life estate deed?

One disadvantage of a life estate deed is that the life tenant cannot sell or mortgage the property without the consent of the remainderman. Additionally, the life tenant is responsible for property taxes, maintenance, and insurance. If the life tenant needs to move to assisted living or faces financial difficulties, they may have limited options due to the life estate's restrictions. It's important to consider these factors carefully before establishing a life estate.

Can you sell a property with a life estate deed?

Yes, you can sell a property with a life estate deed, but the sale must be done with the agreement of the life tenant and the remainderman. The life tenant retains the right to live in the property until death, so any sale must account for this arrangement. The new owner would then take ownership subject to the life estate, meaning they cannot occupy the property until the life tenant passes away.

Does the remainderman own the property?

The remainderman does not own the property while the life tenant is alive. They have a future interest in the property, meaning they will gain full ownership only after the life tenant's death. Until then, the life tenant retains the right to use and occupy the property. This arrangement ensures that the life tenant has a place to live for their lifetime, while the remainderman will inherit the property later.

Who is given a life estate is called the life tenant?

Yes, the person who is given a life estate is referred to as the life tenant. The life tenant has the right to use and occupy the property for their lifetime. They are responsible for maintaining the property and paying associated costs, such as taxes and insurance. Upon the life tenant's death, the property passes to the remainderman, who is the individual designated to inherit the property.