Legal Question in Real Estate Law in California

You certainly can borrow against a life estate legally. The trouble is finding a borrower who will consider it to be any kind of security. Perhaps if it were a life estate in some income producing property and there was a life insurance provision in case the borrower died prematurely, a lender might be interested in it as security, but in most cases I think they would just say it's an unsecured loan and not want to bother with the life estate.

By estate do you mean assets transferred into a living trust? If so, then, you can revoke the trust, take the assets you need and then create a new trust. Contact me directly.

Life estates are possessory interests in real estate, and can be sold or hypothecated (used as collateral). However, they are a "depreciating asset" in the sense that when the person who is the "measuring life" (usually, but not always, the person holding the life estate) passes away, the life estate ceases to exist and is valueless. Does that make the life estate bad collateral? For most lenders, probably. I doubt that most banks would lend on a life estate for most borrowers. If the measuring life is young and has a close relationship, business or personal, with a small-town bank, it might be another story.

On the other hand, auto loans are also made on depreciating assets, and in some ways resemble life-estate loans in risk characteristics.

Other possible lenders would be the remainderman (person to whom possession reverts upon the death of the measuring life) or someone who could use the property such as the owner of a neighboring farm.

So, I guess the answer is they're legal but not necessarily available. Life insurance could perhaps be used creatively to reduce a lender's risk and make the deal more attractive.