(20) First, in section 138 the Restatement declares that a life tenant has a duty not to diminish the "market value" of the subsequent interests.
In Melms, the court specifically held that a life tenant is entitled to make substantial alterations in a structure or even to demolish it, absent a contractual obligation to restore the property to the condition in which it was received, "when ...
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.
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.
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.
The crux of Dukeminier's case against section 2-707 is that it deprives B of the "flexibility" to "deal with changes in his family circumstances during the life tenant's life."(90) Dukeminier's claim is worth repeating: Section 2-707, he says, deprives B of the "flexibility" to "deal with changes in his family circumstances during the life tenant's life"!
There is much that is wrong with Dukeminier's claim that section 2-707 deprives the remainder beneficiary, B, of the "flexibility" to "deal with changes in his family circumstances during the life tenant's life."(96) First and foremost, the predeceased beneficiary of a transmissible future interest can only transmit a future interest, not a present interest.
Only the life tenant can take into account changes in family circumstances occurring after the remainder beneficiary's death but before the distribution date.