Kovats Real Estate School Practice Test

How may a life estate be created?

1. Only through oral agreement

2. By selling property

3. By will or deed

4. By a government regulation

The correct answer is: By will or deed

A life estate can be created specifically through a will or deed, which are formal legal documents that outline the terms of ownership and the duration of the ownership interest. A life estate grants an individual the right to use and benefit from a property for the duration of their lifetime. Upon the death of the life tenant, the ownership interest automatically transfers to another designated individual or reverts back to the original grantor or their heirs, depending on the terms set out in the deed or will. The other methods mentioned, such as oral agreements or selling property, do not provide the legal framework necessary to establish a life estate. Oral agreements may lack the formalities required for real property transactions, making them generally unenforceable. Selling property transforms ownership outright, rather than establishing a limited interest like a life estate. Government regulation typically does not create estates but instead governs how they are managed and transferred. Thus, the formal establishment of a life estate is unequivocally associated with wills and deeds.