What About A Life Estate

The person who has a life estate is called a life tenant, but that term is misleading. He or she is not a renter, but rather a true owner. The ownership ends at death, however. The one thing a life tenant can't do is leave the property to anyone in a will. The deed or will that gives property to a life tenant also names the person (known as a remainderman) who will receive the real estate when the life tenant dies. "I hereby give my house to my second wife Lucy for her lifetime, with ownership to pass to my son Bill when she dies." Bill, the remainderman, has no rights in the meantime except that Lucy, the life tenant, may not trash the property. She can do just about everything any owner can do: occupy the house, rent it out, even sell it if anyone were willing to buy ownership that would end when she died and Bill became owner. As a practical matter, if she did want to sell and live elsewhere and if Bill cooperated, they could both sign off their claims and share the sale proceeds. The IRS has tables based on her life expectancy, that tell what percent of the sale price should go to each of them