Life Estate
A life estate is a freehold estate limited in duration to the life of the owner or the life of some other designated person or persons. Unlike other freehold estates, a life estate is not inheritable. It passes to future owners according to the prearranged provisions of the life estate.
A life tenant is entitled to the rights of ownership and can benefit from both possession and ordinary use and profits arising from ownership, just as if the individual were a fee simple.
The life tenant’s ownership may be sold, mortgaged, or leased, but it is always subject to the limitation of the life estate.
The life tenant may not injure the property, such as by destroying a building or allowing it to deteriorate. In legal terms, such injury is known as waste. Those who eventually will own the property could seek an injunction against the life tenant or sue for damages if waste occurs.
Because the ownership will terminate on the death of the person against whose life the estate is measured, a purchaser, lessee, or lender can be affected if the life tenant has sold his rights. Because the interest is less desirable than a fee simple estate, the life tenant’s limited rights
must be disclosed if the property is sold. The new purchaser will lose the property at whatever point in time the original life tenant would have lost it.
Conventional Life Estate
A conventional life estate is created intentionally by the owner. It may be established either by deed at the time the ownership is transferred during the owner’s life or by a provision of the owner’s will after the owner’s death. The estate is conveyed to an individual who is called the life tenant. The life tenant has full enjoyment of the ownership for the duration of his life. When the life tenant dies, the estate ends and its ownership passes, often as a fee simple to another designated individual, or returns to the previous owner or owner’s estate.
Pur Autre Vie
A life estate also may be based on the lifetime of a person other than the life tenant. This is known as a life estate pur autre vie (“for the life of another”). Although a life estate is not considered an estate of inheritance, a life estate pur autre vie provides for the life tenant’s “ownership” only until the death of the person against whose life the estate is measured.
Remainder Interest
The creator of the life estate may name a remainderman as the person to whom the property will pass when the life estate ends.
Reversionary Interest
The creator of the life estate may choose not to name a remainderman. In that case, the creator or the creator’s estate will recapture ownership when the life estate ends. The ownership is said to “revert to the original owner.”
Legal Life Estate
A legal life estate is not created voluntarily by an owner. Rather, it is a form of life estate established by state law. It becomes effective automatically when certain events occur. Dower, curtesy, and homestead are the legal life estates currently used in many states.
Dower and curtesy provide the non-owning spouse with a means of support after the death of the owning spouse. Dower is the life estate that a wife has in the real estate of her deceased husband. Curtesy is an identical interest that a husband has in the real estate of his deceased wife.
Illinois has abolished the common law concepts of dower and curtesy in favor of the Uniform Probate Code. This gives the surviving spouse the right to take what is called an elective share on the death of the other spouse.
Homestead Right — Unsecured Creditors
A homestead is a legal life estate in real estate occupied as the family home. In effect, the home is protected from unsecured creditors during the occupant’s lifetime. The homestead is not protected from real estate taxes levied against the property or from a mortgage for the purchase or cost of improvements. In other words, if the debt is secured by the property, the property cannot be exempt from a judgment on that debt.
The homestead merely reserves a certain amount of money for the family in the event of a court sale. On such a sale:
- any debts secured by the home, such as a mortgage, unpaid taxes, or mechanics’ liens are paid from the proceeds first.
- The family then receives the amount reserved by the homestead exemption. Finally, whatever amount remains from the sale proceeds is applied to the family’s unsecured debts, such as credit card debts.
Every homeowner in Illinois is entitled to a homestead estate up to a value of $15,000 for a single person and $30,000 for a married couple. The estate extends to all types of residential property including condominiums and cooperatives. Single persons, as well as householders with spouses and families, qualify.
- No notice has to be recorded or filed to establish a homestead in Illinois.
- A family can have only one homestead at any one time.
- The Illinois homestead exemption is not applicable between co-owners.
- It is applicable to any co-tenant’s unsecured creditors.
- The exemption continues after the death of an individual for the benefit of the surviving spouse as long as she continues to occupy the homestead residence.
- It also extends for the benefit of all children living there until the youngest reaches 18 years of age.
- A release, waiver, or conveyance of homestead is not valid unless it is expressed in writing and signed by the individual and his spouse, if applicable.
- The signatures of both spouses are always required on residential sales contracts, listing agreements, notes, mortgages, deeds, and other conveyances to release possible homestead rights, even if the property in question is owned solely by either the husband or the wife.
No sale would be ordered if the court could determine that nothing would remain from the proceeds for the unsecured creditors.
