Short primer: A life estate gives one person (the life tenant) the right to possess and use real property during that person’s lifetime. Another person (the remainderman) holds a future interest that takes effect only after the life tenant dies. Granting a life estate instead of selling the property changes who controls the property now, who receives proceeds later, and who is responsible for taxes, repairs, and liabilities while the life estate exists.

How a life estate works in plain language

• The life tenant can live in and use the property during his or her lifetime.
• The remainderman cannot possess the property until the life tenant dies (unless the life estate is terminated earlier by agreement).
• Neither party usually has the power to sell the entire fee simple absolute without the other party’s agreement—selling the whole property typically requires both the life tenant and the remainderman to join.
• The life estate is created by deed or will; once recorded, it changes title and runs with the property until the life tenant’s death or an agreed termination.

Main risks and practical problems to expect in Texas

Below are the common risks to consider before granting a life estate to the other owner instead of selling the property:

1. Loss of immediate marketability and reduced flexibility.

   Because the remainderman can’t fully possess the property while the life tenant is alive, you cannot easily sell the entire fee simple interest. Most buyers and lenders prefer an unencumbered fee simple. If one co-owner wants out, a life estate creates a split in interests that complicates a conventional sale or refinancing.

2. Potential for later forced partition or sale.

   A co-owner who holds either a life estate or a remainder interest may still be able to seek a court-ordered partition that can result in a physical division or a sale of the property and a division of proceeds. In Texas, partition procedures and remedies are governed by the Property Code; a partition can be costly and may produce a sale when you preferred ownership or control instead. See Texas Property Code, Chapter 23 for partition rules: https://statutes.capitol.texas.gov/Docs/PR/htm/PR.23.htm.

3. Questions about maintenance, taxes, and insurance.

   Unless otherwise written, disputes often arise over who must pay property taxes, insurance, routine maintenance, and major repairs. If the life tenant fails to keep the property insured or pay taxes, both the property and the remainderman’s future interest can be at risk.

4. Liability for waste and property damage.

   Texas recognizes the duty of a life tenant not to commit ‘waste’—that is, not to damage or substantially devalue the property through neglect or affirmative acts. But proving waste and obtaining remedies can be expensive and uncertain.

5. Financing and mortgage complications.

   Lenders rarely lend on properties whose title is split into life estates and remainder interests. If the property has an existing mortgage, the mortgage lien typically remains on the property and must be addressed; if the life tenant or remainderman takes action (sale, refinance) the lender’s consent or payoff will usually be required.

6. Creditor claims may reach interests in different ways.

   Creditors of the life tenant may seek to seize or attach the life estate or the life tenant’s share of rents and profits during the tenant’s life. Creditors of a remainderman might later try to reach the remainderman’s future interest. These outcomes depend on creditor law and the timing of enforcement.

7. Tax consequences and basis issues.

   Granting a life estate may have gift- or income-tax consequences and can affect the cost basis for later capital gains calculations. Tax treatment depends on how the life estate is structured and on federal tax rules; consult a tax advisor before finalizing any transfer.

8. Family, inheritance, and homestead issues in Texas.

   If the property is a homestead, or if family or marital rights attach, you must be careful how a life estate is created. Homestead protections and community property considerations can limit or complicate the transfer. Getting legal advice is important to avoid unintended consequences for spouses or homestead claims.

9. Unclear or incomplete drafting creates disputes.

   Poorly worded deeds or missing provisions about who pays what and who can do what (e.g., rent the property, make alterations, mortgage their interest) lead to litigation. A life estate deed should explicitly state the parties’ rights and duties.

10. Practical friction between co-owners.

    Even if the documents are clear, day-to-day disagreements about access, rentals, improvements, or selling remaining interests can cause stress and legal bills. A life estate can freeze a relationship in place for many years.

Example (hypothetical fact pattern)

Two siblings, A and B, jointly own a vacation home. A wants cash now; B wants to stay until she dies. A grants B a life estate and retains the remainder. Years later B falls behind on insurance and a storm causes major damage. A must decide whether to sue for waste or pay to repair; meanwhile a potential buyer will not finance a purchase while the life estate remains. A’s ability to liquidate the investment is limited despite retaining the future interest.

How to reduce these risks

• Put responsibilities in writing in the deed or a separate agreement: who pays taxes, insurance, maintenance, and major repairs; who may rent or modify the property; and who pays utilities and HOA fees.
• Include an appraised value or buyout formula so the remainderman can buy out the life tenant (or vice versa) without litigation.
• Consider requiring mediation or arbitration for disputes.
• Record the deed properly and order a title search to see existing liens or encumbrances.
• Coordinate with mortgage lenders before creating a life estate if there is an outstanding loan.
• Talk to a Texas real estate attorney and a tax advisor to draft documents tuned to your goals and to check homestead or marital-interest impacts.

When you might still consider a life estate

Despite the risks, life estates can make sense when the goal is to allow one owner to live on the property for life while preserving the property for heirs or another co-owner. They can be useful estate-planning tools when carefully drafted and when both parties understand and accept the limitations.

Next practical steps

1. Talk to a Texas real estate attorney to draft a clear life-estate deed and any side agreement allocating taxes, repairs, insurance, and sale rights.
2. Get a current appraisal and title report.
3. Consult a tax advisor about gift, estate, and capital gains consequences.
4. If immediate cash is needed by one owner and the other wants possession, compare alternatives: buyout, partition agreement, sale with life tenancy as part of sale terms, or a formal life estate with negotiated protections.

Disclaimer: This article explains general legal principles and common practical issues under Texas law. It is educational only and not legal advice. For advice about a specific situation, consult a licensed Texas attorney and tax professional.