Expert: Dick Dennis - 6/13/2009

Question
QUESTION: Hi.  I live in Arkansas.  My mother had life estate in her home and left it to me and Sister #2 when my mother passed away.  Sister #1 lives in the house.  Sister #2 wants to give Sister #1 her 1/2 of the house, but Sister #1 won't pay the real estate tax or insurance.  If we give Sister #1 life estate with me paying the insurance and taxes and in return getting full ownership when Sister #1 dies, can Sister #1's husband who she hasn't lived with in 20 years, challenge the life estate and my ownership?  Can a totally different Sister #3 challenge anything to do with it?


ANSWER: Unless the state of Arkansas has a different definition of a "life estate," Audrey, that life estate your mother had died with her demise. The person (your mother) granted the life estate is called the life tenant.

Because a life estate ceases to exist at the death of the life tenant's life, this temporary ownership agreement cannot be left to heirs. Sometime in the past, someone (maybe her deceased husband) gave your mother a life estate, which is valid for the life of the person receiving the life estate. She had the right to live there as long as she maintained the property. So, all the other facts you mentioned may not be anything to be concerned about. The house goes back to the person or entity that gave your mother the life estate in the first place. There is the possibility that the person who gave your mother the life estate also gave her the title to the property. You should check with the local county records to know who actually owns that property.

If the person who gave her the life estate is no longer alive, then that person may have deeded the property to someone else. You might have to check with the attorney who handled the conveyance of the title at that time. You should also consult with a local REAL ESTATE attorney to make sure you are doing this all right. I do wish you well.

Dick Dennis







---------- FOLLOW-UP ----------

QUESTION: Thanks, but I am not sure I explained it all to you.  My mother owned the house.  In 1990, she kept life estate and gave title to me and Sister #2.  My mother died in 2007.  At that time, Sister #2 and I took ownership.  Sister #1 lived with my mother and continues to live rent-free in my mother's old house.  Now Sister #2 wants to let Sister #1 stay there, but Sister #1 cannot afford the real estate tax and insurance.  I am willing to pay these and give Sister #1 life estate if in return I get the entire interest in the house when Sister #1 dies.  Sister #1 has a worthless husband who is over 50, but has never held a job.  She is not even sure if he is still alive.

ANSWER: Well, in that case, Audrey, you definitely should consult with a real estate attorney and have him/her set this whole thing up so that your interest is protected. The attorney will make suggestions on how to handle this whole situation. I wish you well.

Dick Dennis


---------- FOLLOW-UP ----------

QUESTION: My mom deeded me and Sister #2 her house in 1990 and kept life estate in it.  My mother died in 2007 and thus her life estate situation ended and my sister and I took over the house.  Now Sister #2 wants to give her share to Sister #1.  I agreed under the condition that we both give Sister #1 life estate with me only being the remainderman.

Answer
You solved your own question, Audrey. I Think that is a very good solution, as long as everybody agrees. But you should understand the responsibilities of being the remainderman and life estate tenant. The life estate tenant is required to maintain the house in livable condition. She cannot let it become an eyesore. You would have the right to evict her is she doesn't maintain the property as agreed. I recommend that you have a real estate attorney put together and agreement so that there is no misunderstanding or slacking off. Yes, the remainderman has the responsibility of paying taxes, insurance, etc. And as long as you are willing, I believe you have made a wise decision. I wish you well.

Dick Dennis