Life Estates

We will discuss leases, which are considered a form of ownership, in a later chapter. However, there is one other type of ownership we should consider in this chapter, namely the “life estate.” This is a type of ownership where the person who receives a deed to a property will own it for a certain time, called the measuring life, only. Then the ownership will pass automatically to another.

Usually, a life estate is established with a deed, similarly to tenancy in common, joint tenancy, etc. A life estate, as with many of these other estates, is defined statutorily, as set forth in Indiana Code § 32-17-2-3:

An estate for life: (1) may be created in a term of years with or without the intervention of a precedent estate; and (2) a remainder may be limited on the estate for life.^[1]

In practice, the creation of a life estate almost always uses language in the deed like the following: “John Smith conveys the following property to Joan Smith, for her life, then to her children from our marriage, in fee simple.” In essence, Joan Smith gets to the use the property in question during her life. I should note that the “during her life” could actually be “during [any person’s] life”, so that the land could be held by Joan during: “Barack Obama’s life,” “George W. Bush’s life”, “Bill Gates’ life” or any number of others, limited only by the idea that the person must actually be alive at the time the deed is executed.  In addition, life estates may be “stacked,” meaning that the property could be “to X for life, then to Y for life, then to Z for life, then finally to Joan Smith, in fee simple.”

This may, of course, create some problems. Perhaps Joan Smith is a miser who refuses to do any repairs to the property during her time there, and so the property is devalued more than normal wear and tear due to her keeping sheep in the living room. Therefore, John and Joan’s children receive a piece of property not nearly what it should have been worth (and may be tempted to sue mom or mom’s estate). When a life tenant damages, fails to upkeep, or (strangely) repairs or improves a property, some variety of waste has occurred. The future owners of the property may therefore take steps to prevent waste, as may be seen in the following case:

Defendant took possession of said tract of land…has the same now under her full control, subject to the rights and equities of this plaintiff….defendant, within the last two years…has cut down, hauled off and sold from off said land a large number of walnut, poplar and other timber trees growing on said lands…and during said time she has also committed waste on said land in other ways, all of which has been to the irreparable injury to the fee simple of said lands, producing great injury to this plaintiff. The complaint shows the cutting and removal, and the threats to cut and remove, valuable growing timber, to the irreparable injury of the fee simple estate, and to the plaintiff as the owner thereof, which clearly makes a case of actionable waste, and for injunction.^[2]

Waste is typically divided into “voluntary or active” and “permissive or passive” waste. The difference between the two is:

Waste is classified as voluntary or actual (sometimes called commissive), and permissive or negligent waste. Voluntary waste may be done by such acts as destroying, altering, or removing buildings, or cutting down timber trees. The failure of the tenant to exercise the ordinary care of a prudent man for the preservation and protection of the estate is permissive waste.^[3]

A rarer case is where the life tenant makes actual improvement to the property that result in increase in value, but also increase the burden (such as tax increase on the land) on the property. While in some states, the fee simple owner can prevent the life tenant from committing ameliorative waste, in Indiana, the test is whether the value to the land has been reduced overall.^[4]

So, to summarize, while the life estate owner has many of the benefit of full ownership of the property (e.g., fee simple), he or she is limited in some ways as to what can be done to, and with, the property. And, while a fee simple owner is free to let the property fall down around his or her ears, the life estate owner has certain duties of upkeep to the property to the remainder owners.

[1] Ind. Code § 32-17-2-3(b).

[2] Robertson v. Meadors, 73 Ind. 43, 45 (1880)

[3] Jowdy v. Guerin, 10 Ariz. App. 205, 208, 457 P.2d 745, 748 (1969) citing 56 Am. Jur. Waste, § 4.

[4] “Therefore, acts that enhance the value of the property are not waste, and the test for waste in Indiana is now the lessening of the value of the estate.” 5 Henry's Indiana Probate Law and Practice § 33.19 (2019)