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What you should know about life estates in California

On Behalf of | Oct 19, 2022 | Estate Planning |

While some types of property transfers in California may seem similar on the surface, there can be significant differences in the legal structure and the rights and responsibilities that come with them. This is especially true when it comes to life estates.

Understanding life estates in California

In short, a life estate is an ownership interest in property that someone holds in their lifetime only. That person – known as the “life tenant” – has the right to use and enjoy the property during their lifetime, but they do not have any ownership rights after they pass away. At that point, the property passes to the “remainderman” who becomes the new owner.

Important considerations regarding life estates

First, the life tenant has the right to use and enjoy the property however they see fit – they can live in it, rent it out or sell their interest in it. However, they cannot make any changes to the property that would permanently damage or change it in a way that would decrease its value. For example, if the property is a house, the life tenant could not tear down a wall or remove a bathroom fixture.

Second, the life tenant is responsible for all maintenance and upkeep on the property. This includes paying the mortgage (if there is one), taxes, insurance and general repairs.

Third, the life estate ends when the life tenant dies. At that point, the property passes to the remainderman. This estate planning tool does not allow the life tenant’s heirs to have any claim to the property.

A life estate can be a useful tool for people who want to transfer ownership of their property during their lifetime but want to retain the right to live there and take care of it until they die. People can also use it as a way to avoid probate. However, it’s important to understand all of the rights and responsibilities that come with a life estate before creating one.