The Basics of a Life Estate

A life estate gives a person rights to a property—usually a house—for as long as he or she lives. The rights are nearly identical to full ownership, except the life tenant cannot sell the property or pass it on after death.

A common scenario is a remarriage where the woman wants to protect her children's inheritance while ensuring her new husband has a home.

A widow who owns a home remarries later in life. Her new husband sells his own house, and they move into hers. She wants her children to eventually inherit the property, not her husband or his family—but she also doesn't want him left without a home if she dies first.

The solution: the husband gets a life estate in the house. He can live there and use it as he wishes for the rest of his life. When he dies, the property passes to the woman's children (or whoever she designates).

As the life tenant, he can use the house much like an owner would. He is responsible for maintaining it and paying property taxes. He cannot sell it or give it away.

Life estates can be created through a property deed, will, trust, or prenuptial agreement. Which one makes sense depends on your situation and goals.

If you hold a life estate and want to understand your rights, or if you plan to give someone a life estate in property you own, consult an attorney.

Getting this arrangement right matters, and mistakes can be costly and hard to undo.