Life Estate Remainderman
A simple definition of a life estate is that it is real property that a grantor gives to another person (grantee) to possess after the grantor dies. The grantor prepares a deed that gives the property to the grantee when the grantor is still alive, but the grantee only starts owning the property once the grantor dies. However, once the deed is created the grantee receives a possessory interest in the estate, which means that a grantor cannot sell that real property without the consent of the grantee.
A life estate can be passed from person to person according to the terms of the deed. The grantor is called the life tenant, and the person that will inherit the property after the death of the life tenant is called the remainderman. The whole thing is complicated which is why you need an experienced Texas estate lawyer to help you create a life estate deed.
The Grantee Co-owns The Property But Cannot Use It
The first complication that emerges with a life estate is that in a way, the grantee partly owns the property, but cannot do anything with the property until the grantor dies. So if a father creates a life estate deed that passes his land into the hands of his kids, the kids can only use the property when the father dies. That means that if the father is becomes incapacitated and is unable to pay property taxes for the land and maintain the land, the kids can do nothing to remedy this as long as their father is still alive, even if the property is declining in value.
Remaindermen And Life Tenant Conflicts
Since the remainderman and the life tenant are co-owners, they both have responsibilities to the land. The life tenant is responsible for the interest portion of the mortgage, property taxes, insurance, and maintenance of the property. Expenses such as the principal portion of the mortgage payments and extraordinary repairs are the responsibility of the remaindermen. If either the life tenant or the remainderman fail to pay their fair share, a conflict that is difficult to resolve will emerge.
Selling The Life Estate
When the life tenant and the remainderman have agreed on a sale price, they may still experience difficulty dividing the proceeds of that sale. The remainderman may demand for a bigger chunk of the proceeds arguing that the life tenant’s interest is miniscule because the life tenant may die at any time. However, even when they agree on how to divide the proceeds, they may not pay equal taxes for the proceeds.
A Better Option For Escaping Probate
There are a number of issues you have to deal with when creating a life estate, a better option to avoid all these drawbacks is to create a living trust. You can form the trust when you are still alive, and you retain full control over the trust because there is no co-owner. The trust becomes the owner of your real estate but you still retain full control over the property. After your death, the trustee for the trust will distribute the real estate to your beneficiaries automatically without going through probate.