legal
Life Estate
An ownership interest lasting only for the lifetime of a designated person, after which it passes to the remainderman.
In depth
A life estate gives the life tenant the right to possess and use the property during their lifetime. After death, the remainder passes to the named remainderman. Misconception: a life estate is not a temporary lease; the life tenant has real ownership rights including the right to lease, mortgage (subject to remainder), and improve. Practically, life estates are common in estate planning to allow a parent to retain use of a home while transferring ownership to children. They complicate sales, since both the life tenant and remainderman must sign the deed. In FSBO and seller-financed transactions, life estate situations require careful structuring. Lady Bird (enhanced life estate) deeds allow the life tenant to sell or mortgage without remainderman consent.
Educational content only. Definitions reflect typical usage in US owner-finance and FSBO transactions; statutes and case law vary by state. Consult a licensed real-estate attorney for fact-specific guidance.