How Does a Texas Life Estate Work?

If you are looking for a way to transfer property in a limited way, you may want to consider creating a Texas life estate. When one person (the life tenant) agrees to allow another person (the remainderman) to take possession of the property after the life tenant’s death, you create a life estate agreement together.

While there are many benefits to creating a life estate, it is essential to understand the rights and duties of all involved. In this article, we will outline the basics of life estates and discuss the rights and responsibilities of both the life tenant and the remainderman. In addition, we will look at the pros and cons of a life estate in Texas and other solutions for passing property on to your heirs.

What is a Life Estate in Texas?

A life estate is a property interest that limits itself by the tenant’s lifetime. In other words, the life tenant holds the right to use and occupy the property for their lifetime, after which the remainderman takes possession.

An older adult often creates a life estate with their child to transfer home ownership to a family member but still retain the right to live there for the rest of their life.

Creating a Life Estate in Texas

There are a few requirements that a life estate agreement must meet to create a valid life estate in Texas.

First, there must be clear evidence of an intention to create a life estate through a deed, will, or trust document. No particular language is needed to draw up a life estate, but you must clarify your intent. Speaking with an experienced real estate attorney can help you create a life estate that considers your interests.

The second requirement is that two (or more) persons create the life estate – the life tenant and the remainderman.

And finally, the life tenant must have a life interest in the property, meaning they have the right to live on or use the property for their lifetime.

Rights of a Life Tenant in Texas

As a life tenant, you have certain rights and duties that come with your interest in the property. First and foremost, you have the right to exclusive possession of the property for as long as you live. Some of your rights include:

• Exclusive possession: No one else, not even the remainderman, can live on or use the property without your permission. 
• The right to all rents or profits if your property produces income from rents, royalties, etc. 
• The right to sell, lease, or mortgage your property, but only during your lifetime. 
• You may also use Texas homestead law to your advantage while you live.

Duties of a Life Tenant in Texas

While you have the right to exclusive possession of the property, you also have specific duties as a life tenant. First, during the term of the life tenancy, you must pay utilities, property taxes, insurance, and interest on the mortgage. 

Second, you are responsible for maintaining and repairing the property during your lifetime. This maintenance includes using the property in a way that does not cause unnecessary damage or depreciation. 

Keeping the property in good condition by making necessary repairs is your responsibility. If you fail to do so, you may be liable for damages caused by your negligence. 

Additionally, you are responsible for complying with all local zoning ordinances and building codes. And finally, you cannot convey your interest in the property to another person without the permission of the remainderman.

Rights of a Remainderman in Texas

As a remainderman, you are not responsible for paying any taxes or insurance premiums associated with the property until the life tenant’s death.  After the life tenant’s death, you may take possession of the property and live on or use the property as you see fit. However, you must still observe any restrictions imposed by local zoning ordinances or building codes.

Before the life tenant’s death, you do not have a right to the property. You may feel upset if the living life estate tenant does not take care of the property, pay the interest on the mortgage, or pay taxes as agreed. If the life tenant lets the home fall apart, you financially lose out in the future.

Duties of a Remainderman in Texas

As the remainderman, you have a few duties that you must uphold. First, you must pay the principal of the mortgage each month.  Additionally, you must pay all property taxes, mortgage interest, and insurance premiums after the life tenant’s death.

Finally, you cannot convey your interest in the property to another person without the permission of the life tenant.

If you, as a remainderman, believe that the life tenant has taken any action that reduces the property’s value or restricts or attempts to sell the property, you may bring an action against them. Talking with a real estate attorney can help you make the best decisions about your situation.

Selling a Life Estate

As a remainderman, you may sell your interest in the property. However, the buyer would accept the property with the life tenant still living there. In other words, the buyer would not have the full title until the life tenant’s death. The life tenant would retain use of the property until their death.

If both the life tenant and the remainderman agree, you can sell the property before the life tenant dies. The money you would get from the sale depends on how old the life tenant is and how long they may live. If the life tenant is older, the remainderman will receive more profits from the sale.

Cons of Creating a Life Estate in Texas

When a parent names their child a remainderman, they can’t back out. While the parent is still alive, the children have a limited ownership interest. Life estates can bring significant family disagreements.

For example, if the parent does not make a repair that the child insists is crucial, a child can take the parent to court for not upholding their end of the agreement. If the parent can’t pay the interest or utilities on the home, the child may also make a claim.

Other Methods to Bequeath Real Property

Understanding the basics of life estates helps you know your rights and duties before creating one. However, family disputes can happen quickly with life estates. This is why many individuals choose to pass real property on to children in other ways.

One of the more popular ways to pass property on and avoid probate court is through a properly recorded Transfer on Death Deed (TODD). With a TODD, your heirs have no say in what you do with your property while you live. They may feel upset if you don’t care for your home, but they have no legal right to take you to court because of it.

Talking with a real estate attorney can help you choose the best way to leave a property inheritance when you die. If you have questions about life estates or other ways to bequeath property, contact an experienced real estate attorney in Texas.

We Can Help

At The Jarrett Law Firm,  PLLC, we help our clients with various real estate needs, including life estates and Transfer on Death (TODD) legal agreements. If you have questions about life estates or TODDs,  please contact us today for a consultation. Our experience in Texas real estate matters assures legal documents that stand up to scrutiny and the test of time.

Contact us today to answer your questions and help protect your future interests. We look forward to speaking with you soon.