PSI New Jersey Real Estate State Practice Exam

When is a life estate terminated in relation to the recipient?

1. When the beneficiary decides to sell the property

2. When the recipient becomes deceased

3. When the property passes to the heirs

4. When the recipient reaches a certain age

The correct answer is: When the recipient becomes deceased

A life estate is a type of property ownership that is limited to the duration of a specific person's life, known as the life tenant. The defining feature of a life estate is that it grants the holder certain rights during their lifetime, but those rights terminate upon their death. Therefore, when the recipient of a life estate, or the life tenant, passes away, the life estate is automatically terminated. This concept underscores the temporary nature of life estates, as they are inherently tied to the lifespan of the individual designated to hold the estate. Upon the death of the life tenant, the property typically reverts back to the original grantor or is passed on to a remainderman, depending on the terms of the estate's creation. This ensures clarity regarding the transfer of property rights and the cessation of ownership under the life estate. The other options do not encompass the fundamental nature of life estates. Selling the property, the passage of property to heirs, or reaching a certain age does not influence the status of a life estate; it remains tied solely to the life of the beneficiary.