In first week of the
first year of law school, every lawyer learns that property is "a bundle
of sticks." What this quaint saying means is that ownership of property
can be divided into multiple sections. The most common example of this division
of property rights is probably the severance of the “mineral” rights from the “surface”
rights.  Similarly, an individual may own
a tract of land, but sell the timber on the land in the form of a "timber deed."
Another way to divide property is between present interest and future
interest.  The present right to use and
enjoyment of the property is what is known as a “life estate.” The owner of the
life estate has exclusive rights to the use and enjoyment of the land,
including the right to live there, and all income rights from the property, as
long as the life estate owner has a pulse. The “remainder” interest of the
property is what remains at the death of the life tenant.  This right is called a future interest in the
property because it does not grant present rights until the death of the life
estate owner, some time in the future.  Frequently,
the life estate and remainder interests are severed when an individual desires
to leave a spouse or other loved one with the rights to enjoy or reside in
property during their remaining life, but want to ensure certain other individuals
receive the property upon the death of the intended love one. A transfer of the
remainder interest gives him these assurances, since the life estate tenant is
unable to control ultimate distribution of the property because what they been
only exists as long as they have a pulse.

Skilled practitioners
frequently used the severance of the present and future interest in property to
reduce values, and therefore potential gift or estate taxes, or as a mechanism
of asset protection planning such as protecting land from a Medicaid liens or
loss to a nursing home or other creditors.