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Life Estates Created Under Wills
Author: 
Cheryl Pearson
November 3, 2022
Hand holding magnifying glass and looking at house model, house selection, real estate concept.

In a recent article, we examined The Homesteads Act of Manitoba. This Act protects the right of a non-owning spouse to live in the family home for their lifetime, thereby creating a “life estate” for the non-owning spouse. Now that you are familiar with the concept of a life estate, let's take a closer look at how this concept stretches beyond The Homesteads Act. 

It’s possible for a person to grant a life estate under their Will to any individual they choose (not just a spouse) and for any real property they own (not just the family home). 

For example, you have an adult son who lives in your home and you want to ensure he can continue to live there even after your death for as long as he wants. If he dies or decides to move out, you want your Executor to sell the home and divide the sale proceeds equally among all your grandchildren. You can set out these wishes in your Will, and upon your death, a life estate is granted to your son. Your son living in the home becomes the “Life Tenant.” Your grandchildren are the “Remaindermen” and are entitled to the remaining interest in the property once the life estate terminates. 

The Rights Of A Life Tenant

The term “Life Tenant” can be misleading. The relationship between the Life Tenant and the Remaindermen isn’t analogous to that of a “landlord and tenant” relationship. The holder of a life estate has the right to immediate possession of the property and is able to use the property as if they’re the owner. The Life Tenant also has the right to take the income and profits derived from the property during the term of the life estate. The Life Tenant doesn’t need to sign a lease agreement with the Remainderman or pay rent to the Remaindermen, he cannot be evicted like a regular tenant, and he can even prevent the Remainderman from having physical access to the property during the term of his life estate. 

The Obligations Of A Life Tenant

The Life Tenant does have restrictions to protect the rights of the Remaindermen entitled to the property at the end of the life estate. In a sense, a Life Tenant is a quasi-trustee and must consider the interests of the Remaindermen. The Life Tenant cannot devalue, destroy or sell off the property to the detriment of the rights of the Remaindermen. At common law, Life Tenants are ordinarily responsible for current expenses (such as utilities and property taxes) and routine maintenance of the property (unless otherwise stated in the Will or grant of life estate). 

Unless the Will states otherwise, there’s no positive duty imposed on the Life Tenant to do anything beyond routine maintenance. That said, the Life Tenant has no claim against the Remaindermen for the costs of improvements or repairs that have been undertaken unilaterally by him except for repairs done in the name of preserving the property from further deterioration (i.e. as acts of salvage). 

If the Life Tenant permanently damages the property resulting in a reduction in the value of the property and a lasting loss to the Remaindermen, the Remaindermen can take legal action against the Life Tenant. For example, the Remaindermen can apply to a court for an order preventing the Life Tenant from injuring the property and/or an order that the Life Tenant pay damages to the Remaindermen. It’s also possible in very egregious circumstances for the Remaindermen to apply for a court order to sell the property thereby ending the life estate (although the court tends to use its discretion cautiously and it’s a very rare occurrence to see the court force a Life Tenant to lose their life interest in the land against their will). Keep in mind that the onus is on the Remaindermen to prove that the Life Tenant has caused a lasting loss to their remaining interest. 

A Word Of Caution

The creation of a life estate in your Will may be an ideal solution to address your family’s needs. That said, a life tenancy creates two layers of interest in your property and these interests can collide. Ongoing relationships involving competing legal interests can be ripe for conflict and litigation. In a sense, the Remaindermen are at the mercy of the Life Tenant: their inheritance is in his control for his lifetime. Absent a court action (which is both costly and emotionally taxing), there’s very little the Remaindermen can do to preserve their inheritance. Obviously, this isn’t an ideal situation and likely the last thing you imagined would happen to your family when you granted a life estate to your child in your Will. 

It’s often more prudent to provide finality through separate and distinct bequests to your beneficiaries. For instance, depending on the nature of your estate, you may consider gifting the house outright to your son and leaving other assets to your grandchildren. Or you may direct your Executor to sell the house upon your death and divide the proceeds among your son and the grandchildren, such that your son will have the cash to find a new home for himself free of any Remaindermen interests, and your grandchildren will have immediate use and control over their respective inheritances.