life estate

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Life Estate

Real estate owned only for the duration of one's life, at which time it reverts to the original owner. The owner of a life estate, called a life tenant, has all rights associated with ownership of property except the right to sell the property. Upon the death of the life tenant, the life estate reverts back to the owner, or to a third party designated by the owner. For example, in a will, a farmer may grant ownership of his farm to his children, subject to the life estate of their mother. In this situation, the mother holds the life estate and has the right to live in the farm house for the rest of her life. A life estate may be included in one's gross estate.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

life estate

The right to use and enjoy real estate for a limited time measured by someone's life— either the owner of the life estate or someone else. Often used as an estate planning tool so that elderly people can sell their property or give it to relatives,but still retain the right to continue living in it.

Example: Mary Smith, who is 85 years old, has a life estate in Blackacre, but it's for the life of 10-year-old Ashley Brown. As a result, Mary and her heirs will be able to use the property until Ashley dies, hopefully some time in the distant future.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Tobias wish to dispose of their life estates prior to their deaths, their basis in the property will be determined under the general rule referred to above: they will measure gain or loss from the portion of their adjusted basis, calculated at the time of gifting.
If the Tobiases transfer their residence to their children with a retention of a life estate in the property, they will have made a transfer subject to gift tax under the provisions of IRC section 2501.
This new law could offer a right of election for any surviving spouse with a homestead life estate to trigger an optional buy-out.
Since the life estate is to be valued actuarially (and in most cases, regardless of the surviving spouse's physical health at the time of the decedent's death), this strategy may be effective when the surviving spouse is not expected to live for the entire length of her life expectancy and the life expectancy is less than 10 years.
As might be expected based on the foregoing discussion of problems in valuing life estates, valuation problems also are present in discretionary trusts.
Example 3: L inherits a life estate valued at $300,000 from her great-aunt.
A life estate retained by a grantor in a deed entitles the grantor to remain in possession of the subject real property until his or her death and gives the grantee (a/k/a remainderman) the grantor's remainder interest in the property.
A life estate is defined as the total rights of use, occupancy, and control of a specified property limited to the lifetime of a designated party.
Gift of retained life estate. Deed ownership of your personal residence, vacation home or farm to the IREM Foundation but retain occupancy.
The IRS has been given authority to issue regulations which may modify the generation-skipping rules when applied to trust equivalents, such as life estates and remainders, estates for years, and insurance and annuity contracts.
It includes actuarial tables for valuing annuities, remainder interests and life estates, and tables reflecting income tax and estate and gift tax rates.
Life estates given to the decedent by others in which the decedent has no further control or power at the date of death are not included.