b) Exception -- if you have a life estate and there was a mine already open on the property then you can take as much from the mine as you wish
ii. Permissive (involuntary) waste
a) failure to maintain the property in a reasonable state of repair
b) need not make repairs that are in excess of the property or if you live on the land you need not make expenses in excess of the value of occupation
iii. ameliorating waste
a) an affirmative action that changes the property value -- but increases the value of the property
b) no remedy for this type of waste
i. person who has a life estate will maximize the present value of the property and not care about the future interest holder
ii. can't rely on bargaining b/c you may not know who the future interest holder is
d. Inflexibility of the life estate has led to rise of the trust
e. Sale of property by the court
i. statutes in many states authorize a court to sell a fee simple in land under specified conditions, upon petition of the life tenant. Proceeds are then held in trust
VII. Future Interests
A. The Trust
a. a fiduciary relationship with respect to property in which one person, the trustee, holds the legal title to property subject to equitable rights in beneficiaries. It basically is a device whereby on person manages property for the benefit of others.
2. Power of the trustee
a. trustee has the power to sell trust assets and reinvest the proceeds in other assets unless it appears from the trust instrument and the surrounding circumstances that the settlor intended that the particular property be retained in the trust
i. held to a high standard of conduct in managing the trust property
3. Spendthrift Trusts
i. a trust in which the settlor imposes a valid restraint on alienation, providing that the beneficiary cannot transfer his interest voluntarily and that his creditors cannot reach it for satisifaction of their claims
a) Broadway National Bank v. Adams
ii. recognized in most American courts
i. legal title is in the trustee and not the beneficiary and therefore the trust is not made inalienable by a restraint on the equitable interests
c. Policy Issue?
i. Is it wise to permit trust beneficiaries to enjoy a stream of income unreachable by creditors?
ii. Is it against public policy that man should have an estate to live on but not one with which to pay his debts?
i. Does the trust defraud creditors?
a) should the creditor have check more thoroughly?
b) this could greatly increase transaction costs and consequently increase the cost to the provider of capital which is then spread out among all debtor's through higher interest rates / fees -- everyone pays a little bit more to protect the spendthrift child