Real Estate Terms Dictionary
Life Estate Deed
Definition of 'Life Estate Deed'
According to USLegal.com, a life estate deed is a legal document used to transfer the title in property from one party ("the grantor" or "life tenant") to another ("the remainderman") upon the death of the grantor.
What is a Life Estate Deed:
One way to protect real estate from court probation upon the owner's death is to sign a life estate deed in which the grantor transfers the property to the remainderman.
The document must be recorded with the appropriate Registry of Deeds, and once it is recorded the remainderman has what is called an "ownership interest" in the property. In other words, selling the property, securing a mortgage or refinancing must be done with the consent of the remainderman.
The main benefits of a life estate deed are related to the estate taxes. The remainderman inherits the property at the value it has at the date of the grantor's death and not at the time the life estate was registered. In this way, capital gains taxes can usually be avoided if the heirs want to sell the property.
Here's a real-life example from one of the properties researched on PropertyShark:
The glossary is intended to provide real estate professionals and home buyers with a basic understanding of various specialized terms related to legal rights over a property. All terms appear in public records such as ACRIS. We do not take responsibility for the legal accuracy of the definitions provided and ask that use of these explanations in a legal setting be made only after checking with a lawyer or another specialist in the field.