ROGERS

Valuing The Homestead Estate (US v Rogers, 461 US 677 (1983))     

The right to shelter one’s entire lifetime in the estate considers the facts of each case. When  the property in question is unencumbered, the value of the lifetime  estate equals the present value of future market rent over the spouse’s  lifetime, less the present value of future maintenance costs (which  include taxes). As a future  market rent can be very difficult to predict, the estate could best be  valued implicitly, by subtracting from today’s value of the property  today’s discounted value of the future property at the time of death.  This Homestead Estate is discounted for the probability of survivorship and for the time-value of money.  When the property is encumbered, the cost of maintenance includes the yearly cost of the mortgage. Depending on the percentage of encumbrance there could still be a sizeable homestead property estate left.        

Valuing  the lifetime estate is sometimes visited in litigation when the property  is bequeathed to someone other than the spouse and that spouse retains  the right to continue to live in that property.   A conflict develops  when the new property owner wants to acquire exclusive rights to the  property and would like to liquidate that spouse's property interest in  the homestead.   Survivorship is not considered a discount once death of  the owning spouse occurs.  The estate's value considers the  above methodology and a discount only for earnings.