What is a Life Estate?

What is a Life Estate?

Under Michigan probate law, a life estate is a specific restriction on a gift to a relative, in that the gift only lasts as long as the relative’s life. For instance, suppose that a woman leaves a life estate in a piece of real estate to her second husband, with whom she has no children. After her death, the husband has the right to live in, use, and enjoy the real estate for the duration of his life, as a life tenant. Upon the husband’s death, however, the real estate would revert back to the woman’s estate, which means that it would be distributed in accordance with the woman’s will. In many cases, the real estate would go to the woman’s adult children from her first marriage. This arrangement allows the husband to continue to live in the home and essentially treat the real estate as his own until he passes away.

Although a life tenant can live in, rent out, or do whatever he or she wishes with the real estate, there are some limits. For example, the life tenant must reasonably maintain the property and keep it in a good condition. He also is responsible for any financial aspects of the property during his life, including paying taxes and mortgage payments. The life tenant cannot allow the property to become encumbered by a tax lien or a judgment for past-due mortgage payments. Typically, the life tenant cannot make major changes to the property without the consent of the heirs who later will inherit the property, and he or she also should refrain from exploiting any natural resources on the property.

Planning for the financial future of your family is a complex process that can involve many different options. By answering some of the questions about how to create an effective and well-funded plan for the future, it is our hope that we can help you create the long-term care and estate plan that is best for you and your family. At Legacy Law Center, we are here to advocate on behalf of all individuals and their families who need help planning for the future, no matter what options you choose. Contact us today at (734) 995-2383, set up an appointment with one of our Michigan estate planning attorneys, and discover how we can help you and your family.

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