The majority of life estates
will run until the life tenants die, in which case the remaindermen will succeed to the entire interest in the property.
Editor's Note: This is the first in a two-part series discussing the planning opportunities afforded by deed transfers with a retained life estate
. The second part will run next month.
The court declined to extend the doctrine of acceleration to the situation of a life estate
created by operation of the homestead laws.
Actuarial tables provide that a life estate
for an individual aged 80 is $0.40710 for each $1.00 of property transferred.
While the focus above has been on life estates
, remainder interests also may be difficult to value or be incapable of valuation.
Example 2: N placed property in trust, retaining a life estate
in trust income with the remainder to his daughter M or to her estate.
* Life Estate
and Enhanced Life Deeds Offer Viable Alternatives to a Titleholder Who Wants to Retain Ownership or Control Over Real Property, But Also Wants to Avoid Leaving the Burden of Probate on His or Her Heirs--Property owners often want to retain possession and control of their real estate while they are alive, which is usually the motive for not delivering deeds conveying title to the grantees until after their death.
are common in rural areas where parents sell their property to their children and retain a life estate
in the buildings and a small acreage around the structures.
Contributors may choose to give through their wills, life insurance policies, life estates
, trusts or annuities, or through other methods, which can include:
Besides conservation restrictions, other land protection tools include donating or selling the land to the town or a land trust; a bargain sale of land; bequests; reserved life estates
in which the landowner retains ownership for a specified time; and limited development, in which houses are clustered on smaller lots surrounded by preserved open space.
Arrangements to which this subsection applies include arrangements involving life estates
, estates for years, and insurance and annuity contracts." (1)
In order to avoid inclusion under Code section 2036 (i.e., prohibition against retained life estates
) of the underlying partnership assets (rather than the partnership itself) a donor or decedent should adhere to all partnership formalities and should not: (1) put virtually everything they own in the partnership; (2) retain complete control over the income of the partnership; and (3) use the partnership to pay personal expenses (see also, page 427).