Life Estate is a real estate contract based on the principle of separation of ownership.
A property can be split into its bare ownership and its usufruct (or right of use). The buyer owns the bare ownership while the seller keeps the usufruct. The law defines bare ownership as ownership of a piece of property without the right to use and derive profit from that property. And, logically, the usufruct constitutes the right to use and derive profit from a piece of property belonging to another.
In the case of a Life Estate contract, the seller retains the life-long right to live in the property.
Under this contract, acquisitions are exclusively made by a lump sum paid upfront. By way of consequence, this lump sum includes all future annuities, hence eliminating the uncertainty over the acquisition cost.
Life Estate basically enables seniors to enjoy their retirement fully in the comfort of their home by releasing the real estate equity and turning it into liquid capital.
