Life Estates

[mlw11]

My mom passed away 2 years ago and left the home to myself and sister, with stepdad having life estate. How exactly do these work? Are we able to make changes to property without his permission? Are we able to live there, with him? What bills are we responsible for? Are we able to borrow the home's equity on a line of credit?

I appreciate any help! Thank you!

[Mr. Knowitall]

You have a future estate. The life tenant has the right to exclusive possession, unless the terms of the life estate provide otherwise. Normally the life tenant pays routine upkeep, insurance, and the interest on any mortgage. Major repairs, such as a roof replacement, would typically be apportioned. The principal balance of any mortgage would normally be paid by the remaindermen.

[jk]

Are we able to make changes to property without his permission?

generally, no nor is he, generally.

Are we able to live there, with him?

if the life estate does not address such an arrangement, if step-dad allows you to live there you can. He can also charge you rent to live there if he wants to as well.

What bills are we responsible for?

whatever you agree to.

Are we able to borrow the home's equity on a line of credit?

it is possible. speak to your preferred lender.

basically, a life estate means the remaindermen (you and sis) have actual owner ship of the property but step-dad having a life estate gives him sole rights to the use of the property as long as he lives. For all practical purposes, it would appear as if he actually owned the property. He has that much control over the use of the property.

[mlw11]

Okay thanks for the help. So as far as insurance, homeowners... we have been paying that yearly, me and my sister. Step dad has been paying renters insurance... Are you saying he should be responsible for homeowners, typically? The home needs repairs, like a new fridge and gravel for driveway. Who would be responsbile for these? Are you saying he is responsible for upkeep, but major repairs me and my sister??


Also, my sister is trying to get financial aid for college, but couldn't bc the house was listed as an asset to her. However, if we don't "own" the house, how much of an asset is it really, and is it still considered and asset then?

My stepdad claims her on his taxes, and she can't get financial aid also bc of his assets. I don't feel this is fair to her bc she will be stuck with paying her loans back, not him. The only reason she is "dependent" is bc she's on his insurance. IS this a normal situation?

Say we wanted to "buy my stepdad out" of the life estate? Is this possible? What if one day he decided he wanted to move, what document would override the will, if any? could he still have life estate without acutally living there?

thanks for all of the input and advice!

[jk]

could he still have life estate without acutally living there?

yes. In fact, he can sell his life estate rights or rent the house (and claim the income from the action)

somebody needs to have owners insurance and actually, both should. He may or may not be liable for damage to the house if it is damaged. You will ultimately suffer should he not be liable or fail to repair the house so you should have your own to protect your interests.

The home needs repairs, like a new fridge and gravel for driveway

the driveway, yes.. the fridge; questionable as it is not actually part of the house. Based on the situation, I would say the fridge is his anyway. Most likely it was purchased with marital funds as as such, he would have inherited it when mom died.

Also, my sister is trying to get financial aid for college, but couldn't bc the house was listed as an asset to her. However, if we don't "own" the house, how much of an asset is it really, and is it still considered and asset then?

because you and sis do own the house and you get to possess it after step dad dies or relinquishes the life estate. She could even sell her share so yes, it is an asset.

My stepdad claims her on his taxes, and she can't get financial aid also bc of his assets. I don't feel this is fair to her bc she will be stuck with paying her loans back, not him. The only reason she is "dependent" is bc she's on his insurance. IS this a normal situation?

if she is a dependent of step dad, then she is simply experiencing what thousands of other dependents experience. Your financial benefactors worth is used to determine loan qualifications.

Say we wanted to "buy my stepdad out" of the life estate? Is this possible?

if he wanted to sell, yes, you could agree to that. You would be hard pressed to force it unless he is allowing the home to fall apart or damaging it.

What if one day he decided he wanted to move, what document would override the will, if any?

He can move but he still owns the life estate unless it is specifically written that he must reside in the home to retain the life estate. As I stated previously, he can sell his life estate or rent the house if he wants. As stated in a previous post; for all practical purposes, his interest in the home is so great there is little to observe that would allow one to tell a life estate from actual ownership.