At first blush, Zuleger v. Clore looks like a pure state-law property dispute about life estates, remainders, and an aging house that no one can afford to fix. But for bankruptcy practitioners—especially in North Carolina—it quietly sharpens an issue we wrestle with all the time:
How do you value a life estate or remainder interest when the law allows liquidation in theory, but the market reality says otherwise?
The answer in Zuleger reinforces—and importantly, complements—the valuation logic bankruptcy courts have long applied under In re Cain.
What Zuleger Clarifies About Value
The Court of Appeals reaffirmed that under N.C. Gen. Stat. § 41-11, a court may:
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Order a sale of property subject to a life estate when it is economically unproductive; and
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Pay the life tenant the actuarial value of the life estate in cash, while protecting the remaindermen by reinvesting the balance .
That matters because it confirms something critical: actuarial valuation is legally relevant when the asset is actually being liquidated. Section 41-11 is a statutory exception to the usual market constraints—it authorizes a court-ordered conversion of a divided property interest into cash.
But—and this is where bankruptcy lawyers should sit up straight—Zuleger only works because the statute allows forced sale and forced conversion.
Enter In re Cain: Why Bankruptcy Valuation Is Different
Contrast that with In re Cain, where the Bankruptcy Court for the Middle District of North Carolina was dealing with a Chapter 7 estate that owned only a remainder interest, not the life estate, and had no power to force a sale of the entire property .
Judge Stocks made two points in Cain that remain devastatingly relevant:
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Actuarial tables are not fair market value.
Mortality tables may tell you the theoretical present value of a life estate, but they do not tell you what a willing buyer would pay for a remainder interest subject to a non-consenting life tenant. -
You cannot value a bankruptcy asset by pretending you can sell interests the estate does not own.
The court rejected the creditor’s attempt to value the remainder by:-
Using statutory life expectancy tables,
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Calculating the present value of the life estate, and
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Simply subtracting that from the fee-simple value.
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That approach assumes a hypothetical sale of both interests—something the bankruptcy estate could not compel.
The “Divide by Three” Reality Check
What practitioners sometimes forget—and what Cain implicitly recognized—is that fair market value in bankruptcy is brutally practical.
Even if actuarial math says a remainder interest is worth $40,000 on paper, the real question is:
Who is buying a remainder interest in a house they cannot possess, cannot finance, cannot insure independently, and may not see for 10–15 years?
In practice, trustees, courts, and practitioners often discount actuarial values dramatically—sometimes by two-thirds or more—to reflect:
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Illiquidity
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Lack of control
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Carrying risks
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Uncertainty of life expectancy
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Absence of a realistic buyer pool
That is how courts get from “actuarial value” to something much closer to one-third of the theoretical number—not as a formula, but as a recognition of market reality. Cain didn’t use the phrase “divide by three,” but that is exactly what its reasoning produces.
Putting Zuleger and Cain Together
Seen together, these cases draw a clean line that bankruptcy lawyers should lean into:
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If the law authorizes forced liquidation of all interests (as under § 41-11), actuarial tables make sense, and cash-out valuation is appropriate.
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If the bankruptcy estate owns only a partial interest, and no mechanism exists to compel sale of the whole, actuarial tables overstate value, sometimes wildly.
In other words:
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Zuleger tells us when actuarial value is legally realizable.
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Cain tells us when actuarial value is a fiction.
Why This Matters in Real Bankruptcy Cases
This distinction shows up everywhere:
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Trustees threatening turnover based on inflated remainder values
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Creditors objecting to homestead exemptions using mortality tables
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Debtors being told they “have equity” that no rational buyer would touch
Zuleger should not be misread as endorsing actuarial valuation across the board. Instead, it reinforces Cain’s core insight: value depends on enforceability.
And bankruptcy courts, thankfully, still understand the difference between:
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Mathematical value, and
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Market value in the real world.
That’s a distinction worth defending—early and often.
To read a copy of the transcript, please see:
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