36) Indeed, like so many of his generation, Merryman was troubled by the decision in Brokaw precisely because of the court's failure to consider the compelling change in circumstances that the life tenant pointed to as a justification for the proposed demolition of the Brokaw mansion and its replacement with a modern apartment building.
Fairchild, (41) to employ a relatively strict rule for deciding ex ante whether a life tenant can make a drastic change in the use of the property subject to a life estate.
50) This New York statute allows a life tenant with a life expectancy of at least five years or a tenant under a lease with an unexpired term of at least five years to apply to a court to alter or replace an existing structure and provides that the court should grant approval if the proposed alteration or replacement is one that a prudent owner would make, it would not reduce the market value of the reversion, the tenant provides security to assure completion of the project and protect the reversion holder from being responsible for its cost, and the proposed alteration or replacement does not violate the terms of any agreement regulating the tenant's conduct.
In short, we expect the future interest holder to allow the possessory interest holder--the life tenant, tenant for years or mortgagor--to make improvements and alterations in the subject property or to be able to repair or rebuild it, as long as these actions do not cause long term harms or risks to the future interest holder.
Taken together, these statutes require the life tenant to pay:
Further, if the costs of the life tenant are becoming too burdensome, and if there are not additional estate planning benefits to depleting the surviving spouse's assets, then cooperative families may make adjustments for one another.
Moreover, if the property is rented, then the life tenant will lose the "save our homes" tax benefits, further inflating the burden of continued ownership.
It appears the life tenant and remainder beneficiaries could agree to one of two outcomes: 1) split the proceeds from the sale based on actuarial values of life and remainder interests or 2) hold the proceeds in a trust that pays all the income to the surviving spouse.
If none of the preferred beneficiaries survives the distribution date, the trust will direct the corpus to a beneficiary or a set of beneficiaries certain to exist at the life tenant's death: one or more established charities, the persons who would be the donor's heirs were the donor to have died when the life tenant died, or the life tenant's heirs.
The set of alternative remainder interests would still control the distribution of corpus, but only to the extent that the life tenant does not exercise the power.
6) As a practical matter, the distribution date usually occurs when the life tenant dies.
In the real world, cases like Krooss,(83) Bomberger,(84) Lawson,(85) Gustaison,(86) and Cox(87) demonstrate that future interests to which section 2-707 would apply arise in much more complicated trusts, and are usually contingent on multiple events, such as the life tenant and perhaps other remainder beneficiaries dying without issue.