Detailed Answer
Under Vermont law, a life estate grants a lifetime beneficiary (the life tenant) the right to possess, use, and enjoy real property during the life tenant’s life. Vermont defines a life estate as an estate measured by the life of the person holding it (27 V.S.A. § 301).
The life tenant may:
- Occupy the property and collect rental income.
- Use natural resources (timber, minerals) provided the use does not constitute waste.
- Make improvements at the life tenant’s expense.
However, the life tenant must:
- Pay property taxes, insurance premiums, and necessary maintenance costs.
- Avoid voluntary or permissive waste that diminishes the property’s value.
When a will designates a remainderman, Vermont law recognizes two primary future interests:
- Vested Remainder: An immediate future interest given to an ascertained person without any condition precedent (27 V.S.A. § 502).
- Contingent Remainder: A remainder that depends on a condition precedent or an unascertained beneficiary (27 V.S.A. § 501).
Example:
- “To A for life, then to B” gives B a vested remainder.
- “To A for life, then to B if B graduates from college” gives B a contingent remainder until graduation.
Upon the life tenant’s death, the remainderman’s interest vests in possession according to the will’s terms. If a remainderman predeceases the life tenant without naming an alternative beneficiary, the remainder may pass under the will’s residuary clause or Vermont’s intestacy rules (14 V.S.A. § 1-102).
Helpful Hints
- Document life estate terms clearly in writing to prevent misunderstandings.
- Keep detailed records of all maintenance expenses and improvements.
- Review the will’s language for any conditions that affect the remainder interest.
- File a memorandum of life estate with the town clerk to put third parties on notice.
- Consult an attorney if you encounter waste or complex contingent remainder clauses.