If you are involved in the probate of a will as an estate administrator, you may find yourself dealing with a situation of a life estate or life interest.
These scenarios involve life tenants — usually a second or subsequent spouse of a decedent who has children from a prior relationship, although not always — who are given the usage and occupancy rights of a property during their lifetime.
Upon the deaths of the life tenants, the rights to the properties are then transferred to the chosen beneficiaries of the original decedent. These people are known as remaindermen, as they receive full ownership of the remainder interest in the property. The purpose of life estates is to provide security during a loved one’s lifetime, while still insuring that a family home or business will remain with the heirs.
During a life tenancy, the tenant is allowed to reap full benefits of their occupancy and management, which may include receiving rental payments. Life tenants are also responsible for the upkeep, taxes and other associated costs of occupancy and may not damage or deteriorate the property other than normal wear and tear usage.
Life tenancies can be useful when there are disabled relatives to be provided for, or if an adult child is addicted to alcohol or drugs or has proven to be hopelessly incapable of managing financial affairs.
Because obligations of remainderman and life tenants can vary, they can be divided between them, e.g., a life tenant might pay the property taxes while the remainderman pays the homeowner’s insurance policy. If you are administering the estate, you may be responsible for notifying the relevant parties of the duties involved and determining who will do what.
Source: The Society of Notaries Public of British Columbia, “Life Estates,” Trevor Todd, Judith Milliken, QC, accessed June 24, 2016