A life estate is when a parent transfers the ownership to his home to his children, but reserves the right to live there until he dies, says Lawyers.com. A life tenant is the parent who retained the right to live in the home until death.Continue Reading
One way to avoid probate is by creating a life estate, because the children's interest in the home transfers when the estate is created, not when the parent dies, says Lawyers.com. Ownership of the home is usually conveyed by deed, and the deed contains the language that gives the life tenant his rights.
During the lifetime of the life tenant, he assumes the financial responsibility of the home by paying all real estate taxes, homeowners insurance and utility bills. The life tenant is also responsible for maintaining the property and making all of the necessary repairs. This can create issues if he is not able to do so, but even if the children contribute financially, it does not change the ownership structure. The children do not get to take possession of the home any sooner because the children made a financial investment in the property even if life tenant is financially unable to maintain the property, advises Lawyers.com.Learn more about Financial Planning