By Harry S. Margolis

In Gordon v. Pappalardo (BAP No. MW 12-60, March 13, 2013), the U.S. Bankruptcy Panel for the First Circuit confirmed a Bankruptcy Court decision that holders of a remainder interest in real estate in Massachusetts do not qualify for homestead protection.

Life Estates

A life estate is a common form of real estate ownership often used for estate and long-term care planning purposes. Typically, parents will execute a deed reserving a life estate and granting a remainder interest to their children. As a result, both the parents and the children own an interest in the real estate, but the parents have the full right of possession during their lives. This means that only the parents have the legal right to live in the property; they would receive the income if the property were rented out; and they are responsible for its upkeep and maintenance. At the parents' death, the property passes automatically to their children, who are called the "remaindermen."

By Harry S. Margolis

What is a life estate?

            The term “life estate” refers to property that is owned by an individual only through the duration of his or her lifetime. Therefore, it’s always for an indefinite period of time.  We usually encounter life estates when dealing with real estate. When you have a life estate, you are called the “life tenant.” For example, you can sell or give your home to your children, but retain a “life estate,” thereby reserving the right to live in, use, enjoy, and control the home until you die. In this instance, your children would be called the “remaindermen.”