Probate has developed a reputation for being something to avoid if you possibly can, and both life estates and joint tenancies accomplish that. They're both means of holding title to real estate, and both allow properties to pass seamlessly to the survivor when one owner dies. The similarities between the two end there, however.
With a life estate, one party has possession and use of the property during his lifetime. This person is known as the "life tenant." Life estates also have another owner, the "remainderman." The remainderman can't take possession of the property until the life tenant's death. With a joint tenancy, each owner has an undivided interest in the property, which they can enjoy and use together, at the same time. Joint tenancies are common between married homeowners, whereas life estates are typically used for the purpose of avoiding probate and are often conveyed from parent to child – the child will inherit and have possession of the house when the parent dies, and the parent has the right to inhabit the property until then.
Joint tenants are free to sell their interest in the property at any time, and they don't need the consent or even the knowledge of their co-owners. A life tenant can only sell his interest in the property with the consent of the remainderman – and even then, the buyer only receives the right to live there until the seller dies, so it's an uncertain deal for the buyer. If a joint tenant sells his interest, ownership of the property automatically changes to tenants in common, which is a similar arrangement but without rights of survivorship.
A remainderman typically has no obligation to make mortgage payments, pay insurance or property taxes, or even contribute financially to the property's maintenance or repairs. The remainderman can do so if he likes, but responsibility for these things legally falls to the life tenant. Joint tenancies typically don't define who pays for what, but co-owners can enter into a separate contract to delineate financial responsibility and to protect claims for reimbursement when and if the property is ever sold.
If you enter into a life estate with someone, you're typically stuck with it – there's no changing your mind and undoing it, unless you both agree. This can vary a bit by state, however. You can add provisions to a life estate deed to allow one party or the other an escape hatch under specified circumstances, or to effectively "evict" the life tenant if he fails to meet his obligations regarding the mortgage or upkeep of the property. A joint tenant can end the arrangement by simply filing a complaint for partition with the court, asking a judge to order the property's sale so each party can take their investment and move on.
Survivorship is one element that both forms of ownership have in common. If either a joint tenant or a life tenant dies, ownership passes directly to the other party without necessity of probate proceedings. With a joint tenancy, the survivor or survivors inherit the ownership interest of the decedent. With a life estate, the entire property passes to the remainderman. Neither a joint tenant nor a life tenant can bequeath their interest in the property to anyone else in a will, and if they should die intestate, without a will, their interest in the property cannot pass to their heirs.
- Edward S. Danhires: Forms of Property Ownership in New Jersey
- LawHelpMN.org: Life Estates – Questions and Answers – Be Careful With Life Estates
- Iowa State University Extension and Outreach: Forms of Property Ownership
- American Bar Association: Home Ownership and Unmarried Couples
- Stewart Virtual Underwriter: Termination of Life Estates
- Legal Information Institute: Life Estate