Frank Lloyd Wright and the Life Estate Agreement

Back in August, I wrote about the battle between the Cook County Public Guardian and preservationists.  The Public Guardian handles the financial affairs of 91-year-old Carolyn Howlett, who has Alzheimer's Disease.  Mrs. Howlett owns and lives in the carriage house of the Avery Cooney estate, which was designed by Frank Lloyd Wright.  The carriage house roof is in disrepair, and the Public Guardian wanted to fix it cheaply, so that Mrs. Howlett could continue to live there.  However, historic preservation groups wanted the roof to be repaired in a (more costly) way that preserves the building's character.

A solution to this impasse was finally reached, and the Riverside/Brookfield Landmark has the details here.  Essentially, the carriage house has been sold to a third party, but Mrs. Howlett retains a life estate in the house.  As a result, she can stay in the house for the rest of her life, and the third party becomes the owner at her death.

This is a good solution, and one that doesn't get used as often as it should.  Here, it's a real win for Mrs. Howlett: she gets to stay in her home, the roof is fixed, and her estate gets some money from the sale.  Note that the fair market value of a house with a retained life estate is less than the fair market value of a house with no such retained life estate.  How much less?  Presumably the parties to the transaction consulted actuarial tables to determine Mrs. Howlett's life expectancy, and then used an agreed-upon interest rate to figure the present value of the buyer's future interest.