A life estate is a form of property ownership in which one person, the life tenant, has the right to use and benefit from property for the duration of their life, after which the property passes automatically to one or more remainder beneficiaries. Life estates are often created through deeds or trusts as part of estate and Medicaid planning strategies. They can allow an older person to retain the right to live in a home while transferring the remainder interest to children, potentially simplifying probate and, in some circumstances, affecting eligibility for public benefits. For life insurance and financial planners, life estates intersect with discussions about housing, long term care, and how property will pass at death.

In practice, advisors encounter life estates when clients have used them to transfer real estate to children while retaining occupancy rights, or when attorneys propose them as part of a broader estate plan. The structure can avoid probate for the property and clarify who will own it after the life tenant's death, but may also limit flexibility to sell or mortgage the property without cooperation from remainder beneficiaries. Advisors must consider how life estates affect liquidity, taxes, and long term care funding; for example, whether selling a property subject to a life estate will provide enough resources for care. They also coordinate with estate attorneys to ensure that beneficiary designations on life insurance and retirement accounts complement property arrangements created by life estates. By understanding life estates, producers can better integrate housing decisions into comprehensive retirement and legacy planning conversations.