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11/06/20 Reed column Life care planning: Homestead life estate: Whose responsibility are maintenance, mortgage, taxes and insurance?

By Sandra W. Reed
Sandra Reed

In his will, Donald provided that his separate property homestead, which has $50,000 remaining on its mortgage, be distributed to Jan, Pam and Jerry, his three children by a previous marriage. However, the will also conveyed a life estate to his present wife, Constance. That means that the children inherit the property as co-tenants, burdened by the life estate in their stepmother.

Jan, Pam and Jerry contend that, because she is living on the property, Constance has the obligation to maintain the property, pay the mortgage, taxes and insurance. Constance claims that, since Jan, Pam and Jerry own the property and she merely has a life estate in it, the children must pay these obligations, splitting them equally among themselves. Who is right?

Who among co-tenants and life estate holder is responsible for maintenance?

The children are right that Constance, as holder of a life estate, has the responsibility of seeing that repairs are done and paying for them. She also must maintain the property in reasonably good condition, although not necessarily in the precise condition that existed when the life estate was initially established. However, Constance cannot intentionally do anything regarding the property that would decrease its value.

Who among co-tenants and life estate holder is responsible for payment of taxes?

The children are right about Constance’s obligation to pay property taxes. Although the heirs - that is, Jan, Pam and Jerry - are usually responsible for tax payments, the surviving spouse has that responsibility as holder of life tenancy.

Who among co-tenants and life estate holder is responsible for insurance?

Constance is correct in contending that she is not responsible for insuring the property. To protect their interest in the property from loss, the children should obtain insurance and pay the premiums to keep it in place.

Who among co-tenants and life estate holder is responsible for mortgage payments?

Neither spouse nor children have it right on this one, because it is tricky. Constance is responsible for paying the interest portion of the mortgage while Jan, Pam and Jerry must pay the mortgage principle. In general, the bulk of a mortgage payment is interest, so Constance’s payments are likely to be higher than the children’s.

Who among co-tenants and life estate holder is responsible for utilities?

The parties assume that Constance must pay the utility bills. They are correct because that is the life tenant’s duty.

Sandra W. Reed practices Elder Law in Somervell County, handling probating of estates, drafting of wills, trusts, powers of attorney and deeds as well as estate and Medicaid planning.  She lives in beautiful Chalk Mountain and can be reached at 254.797.0211; 817.946.2809 or at sreed@kattenbenson.com.