Does a Life Estate Override a Will in New York City?

A life estate overrides a will for purposes of the property covered by the life estate. When a will disposes of property that is already subject of a life estate, the life estate prevails.

However, when the will disposing of life-tenanted property is executed after the execution of the life estate, the testamentary capacity of the grantor becomes subject to questions. To have testamentary capacity, the testator must have an understanding of the nature and extent of his assets. To dispose by will of property that the testator already previously disposed of through a life estate deed may be reflective of the fact that the testator does not have knowledge of the nature and extent of his assets. This can give rise to will contests.

What is a Life Estate

A life estate is a type of property ownership, where one person called the life tenant has the right to the use and enjoyment of the property for the duration of his lifetime, and upon the life tenant’s death, ownership is consolidated with the remainder beneficiary. This type of ownership is common among relatives, such as parent and child.

Parties in a Life Estate

In a life estate, there are two parties, the life tenant and the remainder beneficiary. In a life estate deed, the grantor grants to the life tenant the right to the use and enjoyment of the property during his lifetime, and upon the life tenant’s death, the property is transferred to the remainder beneficiary.

Upon the execution of the life estate deed, the remainder beneficiary obtains a vested right over the property. The remainder beneficiary’s designation cannot be revoked without his consent. A will, designating the transfer of the property under a life estate to another person, is ineffective to divest the remainder beneficiary of his interest.

The Rights and Obligations of a Life Tenant

The life tenant does not have the right to sell, mortgage, or make significant alterations to the property without the consent of the remainder beneficiary. The life tenant can use, enjoy, or rent out the property during his lifetime. The life tenant is usually responsible for all costs and other maintenance expenses related to the use and possession of the property.

The Rights and Obligations of the Remainder Beneficiary

The remainder beneficiary has the right to prohibit any sale or mortgage of the property without the remainder beneficiary’s consent during the life of the life tenant. The remainder beneficiary has all the rights of full ownership over the property upon the life tenant’s death, including the right to sell and mortgage the property.

Example of a Life Estate Deed

The most classic example of a life estate deed is a parent, who is the owner of the property, granting to himself a life estate over the property, with the child as a remainder beneficiary. This allows the property to be immediately transferred to the child upon the parent’s death, avoiding the expensive process of probate proceedings.

Probate and the Life Estate

One of the primary reasons a parent executes a life estate deed is the avoidance of probate. Most individuals have only their house as their sole asset at the time of their death. Executing a life estate deed avoids probate proceedings for the transfer of the house after the parent’s death.

The Will and the Life Estate

Sometimes, however, a person has more assets than the house and will execute a will to dispose of the other assets.

When the will is executed, the testator names beneficiaries for his properties. The will can only dispose of property that is considered the probate estate, which is usually property that does not have a beneficiary designation. For this reason, the will cannot override properties with beneficiary designations such as life-tenanted properties, bank or IRA accounts with beneficiary designations, life insurance policies with named beneficiaries, and the like.

Will, then Life Estate

When a will names a beneficiary for a particular property, and subsequently, the testator transfers the property to another under a life estate deed, the will’s provision regarding the transfer of such property upon the testator’s death to the named beneficiary in the will is considered adeemed. In that case, the testator is deemed to have revoked the beneficiary designation of the property in the will by executing the life estate deed before his death.

Life Estate, then Will

When the testator, on the other hand, executes a life estate over a particular property, and then subsequently executes a will transferring the same life-tenanted property to another person, the testamentary capacity of the testator may be questioned because the testator, at the time he executed the will, was not aware of the nature and extent of his assets. Coupled with other aggravating circumstances, this fact can lead to a will contest.

As a general rule, a life estate overrides a will. However, distributees who are unhappy or who have been omitted from receiving a portion of their parent’s estate may contest the life estate, depending on the unique circumstances of the case. Analysis of life estate matters may be complex and it is important, in case there are any issues, to seek the advice of a probate attorney regarding one’s rights and remedies.

Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].