A common concern for those who have remarried is that they still want to leave the bulk of their estate to their adult children without abandoning their current spouse. The solution? Create a life estate. A life estate is a tenancy that allows a person to use a property for the rest of their natural life, but not own the property.
For example, Larry in Alaska lives with his second wife, Jane, and stepchildren on the ancestral farm he inherited after both his parents died. Larry wants the house to go to his children, but he’s afraid that if he wills the house to them and he dies first, they’ll make Jane leave. If he leaves it to his wife, the house goes to his stepchildren when she dies. However, Larry could plan his estate by giving Jane a life estate, with the farm reverting to his heirs when she dies.
Quick facts about life estates:
A life estate doesn’t:
Give the possessor ownership. Those who have life estates don’t own the property. They’re tenants for the rest of their lives, and unless there are other rules restricting the use of the property, they can use the properties as they wish. For example, if Larry gives Jane a life estate, she can’t turn around and sell the property.
Give the possessor the right to sell or significantly change the property. Likewise, since Jane doesn’t own the property, she can’t make significant changes to it. She can’t take the house down and put up a motel, pave the cornfields, or even put an attached garage on the land. This is called waste.
Give anyone else the power to dispossess whoever has the life estate. As long as Jane isn’t causing waste to the farm, then her stepchildren, Larry’s adult children from a previous marriage, may not remove her from the property. Since she’s also a life tenant, they have to respect her tenancy. This means they can’t intrude, trespass, or disrupt her ability to live peacefully on the property. For example, the children can’t decide to rent the fields to another farmer.
A life estate does:
Allow the possessor to rent the property. Jane can rent out the farm for as long as she has the life estate. For example, if Jane moves away but decides to rent the farm to her brother, she can rent it to him for as long as she lives. He’s still bound by the same rules as she to not change or destroy the property.
Allow the possessor to sell their interest ONLY. Jane can even sell her life estate if she wishes. She can’t sell the property, however, since she doesn’t own it. So long as the buyer knows they’re not buying the property but the life estate, then the sale is legal.
If you’re in a similar situation, contact an Anchorage will lawyer to consider setting up a life estate so you can best take care of everyone whom you consider family.