Life Estate vs. Occupancy: What’s the Difference in Estate Planning?
When planning for the future, many families want to make sure a loved one can continue living in the home after the owner passes away—without causing confusion or inheritance problems. Two common tools used for this are Life Estates and Occupancy Rights. Although they sound similar, these two arrangements create very different legal rights and responsibilities. Understanding the difference is essential for protecting your property, your beneficiaries, and the person living in the home.
What Is a Life Estate?
A Life Estate gives a person (called the life tenant) the legal right to live in and use a property for the rest of their life.
Key Features of a Life Estate:
The life tenant can live there for life, even if they remarry or move out.
The property automatically transfers to the remainderman (final beneficiary) when the life tenant dies—no probate needed.
The life tenant must maintain the property, pay taxes, and keep insurance.
The life tenant cannot sell or mortgage the home without the remainderman’s consent.
Life estates are often used to:
✔ Allow a surviving spouse to remain in the home
✔ Avoid probate
✔ Protect property for children from a prior marriage
What Is an Occupancy Right?
Occupancy rights give someone permission to live in a home—but not full legal ownership rights like a life estate. They’re usually created through a will, trust, or written agreement.
Key Features of an Occupancy Right:
The person may stay in the home for a specific time period (e.g., 1 year, 3 years, or until remarriage).
They normally don’t have the right to rent out the home.
They usually are not responsible for long-term repairs.
Beneficiaries retain control of the property and may sell it, so long as occupancy terms are honored.
Occupancy is more flexible and is commonly used when the homeowner wants to offer temporary housing—not lifetime control.
Which One Is Better?
It depends on your goals:
Choose a Life Estate if you want:
✔ A spouse or loved one to stay in the home for life
✔ Probate avoidance
✔ A guaranteed transfer to beneficiaries after death
Choose Occupancy Rights if you want:
✔ A temporary housing solution
✔ More control for beneficiaries
✔ Flexibility to sell or manage the property later
The Bottom Line
Life estates and occupancy rights can both provide housing security—but they create very different long-term consequences. A life estate creates a permanent, legally enforceable right, while occupancy is temporary and flexible.
Clear planning ensures you protect your loved ones without locking your beneficiaries into unexpected complications.
If you’re unsure which option fits your situation, consult an estate planning attorney before making the decision.