Estate Planning - The Life Estate by aihaozhe2


									The life estate is something every first year law student learns about when they study
the arcane and often bizarre history of property law that harkens back to the days of
English knights, lords and serfs, and the transfer of property through the ceremonial
throwing of dirt clods with oaths of duty to accompany. The life estate is about as old
as they come as instruments of wealth transfer go and students love it, because it is
relatively easy to understand. Apart from what students love and what is easy to
remember, however, the life estate still has practical value today in your estate
planning and assets management schemes.

The basic idea of the life estate is that a person can be left a piece of property for life,
and upon their passing, the property in question can go to whoever is designated to
receive that property afterward. The individual or group who receives the property
after the life-tenant passes is called the remainderman or remaindermen, which is
useful only in that it helps one to remember that the person who remains gets the
property. If, for example, one wants to leave a family estate that has been with the
family for many generations to their spouse and then have it immediately pass on to
their children or another relative who will maintain the estate for the generation to
come, then a life estate might be the perfect vehicle to do so. Another example is the
same family estate, left to a surviving spouse until the surviving spouse either dies or
remarries. Again, the aim is to ensure that the estate stays in family, a contingency
which is threatened by the remarriage because that creates a new marital joint-tenancy,
absent any other provision. Often the life-estate was used to keep assets, like the
family home, headed down a single line of familial ownership.

However, the life estate has other uses, for example, it can leave an asset to be owned
by one person until the death of third person. If an older relative has become
incapacitated, such that it is difficult for them to make decisions for themselves, then
the asset can be left in the care of another for the incapacitated person 抯 lifetime. An
example might be, that Blackacre (the fictitious name for a piece of property used in
law schools everywhere) is left in the care of cousin Tilly, until great aunt Nelly 抯
death. Thus, Tilly is allowed to make Nelly comfortable at Blackacre (the family
home) until Nelly passes on. In this instance, Nelly 抯 life is what is called, the
measuring life of the life estate, and Tilly 抯 ownership ends when Nelly is gone.

On the whole, the life estate may be falling out of use for a number of reasons and
being replaced by the much more fluid instrument of the trust. But, the life estate still
captures, from time to time, our instincts regarding how property is to pass from one
generation to another and that is why it is still relevant even for an estate planner who
uses it very rarely. It helps us to ask and to get the answer to very difficult questions,
which is part of the act of estate planning. Both the client and the attorney must face
tough questions, and the life estate (even if it is sometimes regarded as a legal relic of
the past) tells us how people used to answer questions of intra-generational wealth
transfer and why. We may use different instruments to bring about our legal ends (or
we may not), but even if we do, the life-estate still has relevance in helping us think
about the questions that underlie the choices to be made in estate planning.

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