Adam, a widower with a son, buys a house for $300k. Adam then marries Betty but retains sole ownership. When Adam dies, the house is worth $800k. Adam's will calls for Betty to have a life estate. (Assume actuarial tables put Betty's life estate at 30%.) As per Adam's will, son Chuck inherits the property when Betty dies. By the time Betty dies, the house is worth $1.1 million. What is Chuck's basis?
As side issues: (A) After Adam dies, suppose Betty determines that the house is too big for her. Can Betty rent the house during her lifetime and keep the rental income? Who suffers the economic loss if the tenants damage the house? (I guess it's no different that if Betty damaged the place before she died) (B) If Betty and Chuck agree, can they sell the property and split the proceeds?