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For life estates, who has control over selling the property?

by Jonahan Dougherty | Contributor
February 10, 2023

A life estate can be a powerful estate planning tool for you and your family.

Suppose you want to leave your home to your children. But you want to ensure that your surviving spouse can stay in the house and control the property for their entire life. And you want to know that your spouse cannot be displaced by the children selling the home during your spouse’s life.

A life estate does that and more. For example, this type of transfer also avoids probate for the property.

But there are some disadvantages. Suppose your surviving spouse and the children decide to sell the property and divide the proceeds, but one of the adult children is going through a contentious divorce. How does that affect the sale? And while each state has different life estate and divorce laws, what happens in community property states?

Before using a life estate as part of your estate planning, make sure you know how this transfer of property rights works in your state and if this makes sense for you and your family.

What is a life estate?

A life estate is a property right that allows a person, called the life tenant, to use and occupy a property for the remainder of their life. This is often a spouse or close relative of the deceased.

When the life tenant dies, the property automatically transfers to the designated recipient, known as the remainderman.

Understanding the authority to sell property subject to a life estate deed is essential for the life tenant and the remainderman, as well as anyone interested in buying or selling a property with a life estate.

Life tenant: In a life estate, the life tenant is the person who has the right to use and occupy the property for the remainder of their life. But the life tenant does not have all the ownership rights to the property. Once the life tenant dies, the full ownership of the property transfers to the remainderman

As a life tenant, you are usually responsible for the following:

  • Paying the mortgage.
  • Paying the insurance and property taxes.
  • Maintaining the property and making repairs.
  • The family can agree that your children will pay some or all of these costs. However, if they do not pay, the life tenant must.

Remainderman: The remainderman in a life estate is the person or entity designated to receive the property upon the life tenant’s death. The remainderman has the right to the property after the life tenant passes away but does not have the right to use or occupy the property until that time.

How do you create a life estate?

You create a life estate by transferring certain property rights from you to the life tenant and the remainderman. The rights to the life tenant are only in effect during their life and upon death transfer to the remainderman.

While each state is different, this transfer is usually done through a life estate deed recorded with the county where the property is located. The life estate deed can be created pursuant to a will, a trust or a direct conveyance from the property owner.

Who owns what?

Life estate transfer

The life tenant owns the right to use the property during their lifetime. In most states, they do not have the right to sell the property. Nor do they have the right to mortgage, rent or lease the property without the permission of the remainderman, the future interest holder. The life tenant must refrain from engaging in any activity that would “waste” the property's value, like demolishing the house, removing the pool or remodeling in a way that would lower the value.

And the life tenant must maintain and repair the property.

And while the life tenant owns the right to use the property during their lifetime, the remainderman has a future interest in all the property rights upon the life tenant’s death.

Both the life tenant and remainderman can sell their respective rights to a buyer. But the buyer must adhere to those rights. For example, if you bought the life estate from someone, you would have the right to use the property. Still, upon their death, all the property rights would transfer to the remainderman. But state laws and the life estate deed determines specifically which rights are owned by the life tenant and the remainderman and what they can do with them.

What are the advantages of a life estate?

The main advantage of creating a life estate is peace of mind for you and your spouse or whomever you name as the life tenant. You know the life tenant will have use of the house for their entire lifetime. Then the property can remain in the family as it automatically transfers to the remainderman when the life tenant, usually the spouse, passes away.

A few other significant advantages include the following:

Estate planning: A life estate can provide a way for a married couple to transfer their property to the next generation while retaining the use of the property during their lifetime.

Avoiding probate: By transferring property through a life estate, a married couple can avoid the time, expense, delays and hassles of probate.

Control: A life tenant in a community property state can retain control over the property during their lifetime, including the right to use, occupy and enjoy the property.

Income generation: Sometimes, a life estate can provide a source of rental income for the life tenant, assuming there is no prohibition for renting.

Tax benefits: A life estate may provide tax benefits. When the remainderman receives the property, the tax basis will be the value of the house at the time they receive the house, not the value of the house at the time the life tenant received the tenancy.

A stepped-up tax basis refers to an increase in a property’s tax basis when transferred from one person to another. In the case of a life estate, the remainderman receives the property upon the life tenant’s death. If the life tenant lived in the house for many years, the house value might appreciate substantially.

As a result, any capital gains tax owed on the sale of the property is based on the value of the property on the date of the life tenant’s death rather than its original purchase price or the value when the life tenancy began.

What are the disadvantages of life estates?

While a life estate can be advantageous for some people, there are also disadvantages. Some of the major disadvantages include the following:

Difficulty in selling the property: If the life tenant wants to sell the property, they and the remainderman must usually agree to the sale and sign the necessary documents. There are state law exceptions in some states. This can be difficult if the life tenant and the remainderman disagree on the sale, resulting in a long and complicated process.

And things get even more complex when the parties want to sell, but one has divorce issues.

Limitations on the use of the property: A life tenant has limited control over the property. Usually, they cannot make any significant changes or improvements to the property without the agreement of the remainderman. This can limit the life tenant’s ability to use the property as they wish, which can be frustrating.

Inconvenience for the remainderman: The remainderman in a life estate must wait until the life tenant dies before they can take ownership of the property. This can be a long wait and inconvenient, especially if the remainderman needs to access the property.

Maintenance and repairs: The life tenant is responsible for maintaining and repairing the property, and these costs can be substantial. This can be a disadvantage for the life tenant, as they are responsible for these expenses even though they do not own the property.

Life tenant has no collateral: If the life tenant needs a loan, they cannot use the property for collateral at the bank or lending institution.

Credit issues: Since the life tenant has no future interest in the ownership of the property, creditors cannot look to the property when collecting a debt from them. But the remainderman does not have creditor protection. They own the future interest in the property and are vulnerable to creditors placing a lien on it.

If the remainderman dies first: Life estates are designed to transfer all property rights to the remainderman when the life tenant dies. But what if the remainderman dies first? At that point, the remainderman’s interest goes to his heirs, and the life tenant must deal with them. The issue becomes even more complex if the remainderman dies without a will.

Who has the authority to sell the property?

You can only sell something you own.

And during the life of the life tenant, neither the life tenant nor the remainderman owns all the property rights. The life tenants own the current right to use. And the remainderman owns the future rights to all the property rights. Be aware some states have exceptions to these general rules.

But while neither of them can sell all the rights to the property, they can generally sell the rights they own individually. The life tenant can sell the right to use the property during their lifetime. And the remainderman can sell the future property right that takes effect when the tenant dies.

But suppose the life tenant and the remainderman agree to sell the property together. In that case, they can bring their individual rights together and sell all the property rights to a buyer.

What documents are used to create a life estate?

The state law where the property is located, and the terms of the life estate agreement will determine what documents are needed. The following documents are generally used for a life estate:

Life estate deed: This document establishes the life estate and outlines the rights and responsibilities of the life tenant and the remainderman.

Will or trust: A will or trust is often used when a life estate is established as a part of a larger estate plan strategy.

Title report: This report shows the current ownership of the property. It also details any outstanding encumbrances or liens on the property.

Divorces, fights and needed signatures

A life estate is created by legally splitting property rights between the life tenant and the remainderman, who can be individuals, entities or married couples.

Divorce issues: Suppose that upon his passing, Andy leaves a life estate in the property to his wife, Betty, and names their adult son, Charlie, as the remainderman. Charlie is married to Debby. Debby was never fond of Charlie’s family and will soon file for divorce.

Betty and Charlie decide to sell the property as the real estate market rises. But Debby files for divorce against Charlie and claims his interest in the house is half hers. Can the mother and son sell the property? Do they need Debby’s signature? Does Debby get some of the proceeds?

Generally, most of these answers depend upon whether the divorcing couple is in a community property state and whether the future interest of the remainderman is determined to be marital property.

Community property states: There are only nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

Married couples in these states are usually deemed to own property together, with each spouse having an equal interest in the property. In this case, both spouses must consent to sell property subject to a life estate. And they both must sign the necessary documents.

Family arguments: Generally, even in non-community property states, the spouses of the life tenants and remainderman must sign the necessary documents to sell a property subject to a life estate. For example, in Minnesota, the life tenant and their spouse and the remainderman and their spouse must sign the real estate documents to make the sale of property subject to a life estate valid. If an arguing spouse refuses to sign the documents, no valid sale will occur.

The powerful exception, Lady Bird deeds

A few states have enhanced life estate deeds called Lady Bird deeds. These deeds give the life tenant substantial rights and powers over the property.

For example, a Florida Lady Bird deed allows the life tenant to:

  • Change the remainderman at any time.
  • Use the property as you like, even if you cause the value to go down. You can tear down the house, sell the dirt or build a skateboard park. You do not need permission from the remainderman.
  • Sell the property without the permission or agreement of the remainderman.

In addition to Florida, only Michigan, Texas, Vermont, and West Virginia allow Lady Bird deeds, and each state law is different. If you have a property in these states, Lady Bird deeds might work for you and your family.

Should a life estate deed be part of your estate plan?

A life estate deed can bring you and your family peace of mind.

Your spouse can enjoy the home for the rest of their life. And upon their death, the property can be automatically transferred to your children with no probate and a tax-advantaged stepped-up basis.

And in some states, there are enhanced life estate deeds, called Lady Bird deeds, that give your surviving spouse broad power over the property.

But every state has different real estate and estate laws. And every family has unique circumstances.

A life estate deed has advantages and disadvantages compared to wills, living trusts and other estate-planning tools.

For peace of mind and your family’s financial well-being, your next best step is to decide your best estate planning strategies. By acting now, you ensure your assets will be distributed to your family according to your wishes.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at

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