Life Estate

DEFINITION of 'Life Estate'

A type of estate that only lasts for the lifetime of the beneficiary. A life estate is a very restrictive type of estate that prevents the beneficiary from selling the property that produces the income before the beneficiary's death. But the estate cannot continue beyond the life of the beneficiary.

BREAKING DOWN 'Life Estate'

Life estates are often created by donors who feel that their beneficiary will benefit more from the income from the estate than a lump-sum inheritance. Therefore these estates are invested in various income-producing instruments, such as bonds, CDs, oil and gas leases, REITs and other similar investments.

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RELATED FAQS
  1. Do beneficiaries pay taxes on life insurance?

  2. What would the estate tax be on life insurance policy of $25,000?

    $25,000 was paid to the beneficiary of a life insurance policy. What would the estate tax be and do you have to pay an estate ... Read Answer >>
  3. Why do I need to turn my inherited IRA over to the estate?

    My mother had an IRA and named me as the beneficiary. I am now being told, from the executor of her will, that I need ... Read Answer >>
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  5. What should I do with the beneficiary forms my employer gave me for my 401k if I ...

  6. What are the pros/cons of naming a trust as the beneficiary of a retirement account?

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