The Benefits of Creating a Life Estate

Giving your home to a spouse or child can be much easier through a life estate. LightField Studios/Shutterstock

Giving your home to a spouse or child can be much easier through a life estate, and it will guarantee that you can live in it for as long as you need it. It also has several other benefits that can simplify giving your home to another person.

A life estate is a contractual agreement between the homeowner (the life tenant) and the remainderman (beneficiary). You can make this kind of agreement with a spouse, a child, or anyone else. It can also be made with any person the grantor (the person creating the life estate) wishes. The property will revert to the original owner (if a third party was involved) or beneficiary when they die.

Guaranteeing the Owner a Place to Live

The purpose of a life estate (also called a Lady Bird Deed) is to ensure that the homeowner(s) has a place to live until they die. While living in the house, they are responsible for paying the taxes, insurance, and maintaining the home. The termination of the agreement may occur if these terms are not fulfilled. The owner also has the benefit of claiming any available tax benefits.