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Life-Estate
A "life-estate" is a form of ownership that
is strictly limited to the duration of the owner's life.
Upon the death of the life-estate's owner, the value of the
life-estate automatically transfers to someone else.
Some states
consider real estate separately from all other intestate
property when determining intestate distribution and grant the
surviving spouse with a life-estate, rather than outright
ownership. (Use the interactive
State Law Summaries program to see which states do this.)
Suppose John and Monica have two children.
If John owns a $300,000 vacation home in a state following this
rule and dies without a valid Will, Monica's ownership will be
limited to a life-estate. This right allows Monica to use
the property during her life or, if it is income producing,
collect a portion of the proceeds derived from ownership.
This situation does not prevent the children
from selling their portion of ownership to someone else without
Monica's permission, but any purchaser will take ownership
subject to Monica's life-estate.
Upon Monica's death, her portion will be
given to John's heirs without any direction or influence by
Monica.
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