If the grantor is also named the life tenant
in a life estate or enhanced life estate deed, only minimal documentary stamp taxes will be required to be paid upon the initial transfer; however, the full amount of the documentary stamp taxes for the life estate or enhanced life estate deed will be owed upon the death of the grantor.
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.
For clients who want to give a beneficiary flexibility to change who gets the property when the trust is dissolved, and allow a beneficiary to achieve certain tax objectives, capable estate planners would confer a power of appointment on the life tenant
. 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.
When the life tenant
qualifies for the homestead creditor exemption, the property is still protected from the life tenant
's creditors, but it is not safe from the remainderman's creditors.
1993) (deed by life tenant
can convey only life estate, even if it purports to convey fee simple); ITT Rayonier, Inc.
As for the first question, neither the Official Comment nor the drafters' law review commentary(7) presents empirical evidence indicating that most trust settlors want a remainderman to lose the remainder if he does not survive the life tenant
, substituting his descendants for him if he leaves descendants.
Taken together, these statutes require the life tenant
The majority of life estates will run until the life tenants
die, in which case the remaindermen will succeed to the entire interest in the property.
Decisions involving the improvement or sale of the homestead often involve conflicting interests among the life tenant
and the remaindermen.
TAM 9604005 should be compared to Letter Ruling 9515039, in which the IRS ruled that in a situation involving a joint purchase, a note issued in satisfaction of the life tenant
's annuity would not disqualify the life estate from being a qualified interest in certain circumstances.
The life tenant
is liable for mortgage payments, taxes, and upkeep of the homestead property.
1014(b)(9), which allows the heirs to take the property with a stepped-up basis equal to its FMV at the lime of the life tenant
's death if the life tenant
retains his interest in the property at death (Sec.