Many clients ask us about so-called Texas life estates, specifically what a life estate means under Texas law as well as how they work and who pays taxes on a life estate. As probate, estate, and trust lawyers here in the Dallas area, we often summarize quick answers to such questions in our blog. Accordingly, in this blog post we will review the basics of life estates in Texas. Remember, however, that if you have questions about probate, estates, or trusts under Texas law (up to and including disputes and/or litigation), reach out to one of our Dallas-based attorneys for a consultation.
WHAT IS A TEXAS LIFE ESTATE?
A life estate refers to a period of time in which a person, usually referred to as the “life tenant”, has the exclusive right to occupy certain real property for a period of time – typically the life of the person who has been given the life estate interest. The owner of the life estate has the right to possess the property, use the property, obtain any profits that might be achieved as a result of usage of the property and can, unlike a Texas surviving spouse claiming a homestead, sell his or her life estate interest. A life estate terminates upon the death of the person holding the life estate. The life tenant cannot dispose of any property in which he holds a life estate by will or trust, as the life estate will terminate upon the death of life tenant.
The responsibilities of the life tenant are as follows: 1.) The life tenant, owner of the life estate, is responsible for the repair and upkeep of the property. As the life tenant takes the property with the possibility of any income or profits, there is a corresponding burden to pay taxes, repair and upkeep. 2.) The life tenant is not required to purchase casualty insurance.3.) The life tenant is generally responsible for property taxes assessed against the property. 4.) The life tenant is required to pay the interest on any existing debt for which the property serves as secured collateral. If the life tenant pays off the principal sum of the mortgage to preserve the life estate, he or she is entitled to reimbursement for contribution from the remaindermen. Finally, the life tenant cannot commit waste on the property such as actions taken to lessen the value of the property.
In this blog post, we learned some of the basics of life estates under Texas law. Hopefully, you have a better understanding of what constitutes a life estate in Texas, how they work, and even questions as to who has to pay taxes on a life estate. Remember, however, that if you are facing a potential estate, trust, or probate dispute or even potential litigation, reach out to one of our Dallas-based attorneys for a consultation. We also have a convenient office in Plano, Texas, where we can meet to discuss the facts and law of your potential trust, estate, or probate issue.