If you have children, own a house, and don’t have a spouse, how have you or how will you deal with the house in your will or other estate document(s)?
I have a spouse, but our estate plan covers the case where both of us die and we still own a house. The house has a beneficiary deed that will transfer it to the trust, the trust gets split between the kids. The older kid, now an adult, is the successor trustee, but has the option to pass that task on to an aunt.
We have no expectation that either kid will want the house or anything from the house that won’t fit into the trunk of a small car. We have talked to them about offering any family items they don’t want to the aunts/uncles/cousins on that side of the family (there is nothing worth much money), having an estate sale for the rest, and selling the house.
What is your concern? Whether your kids have the time or expertise to empty and sell the house, or whether one or all of them might want to keep it?
Depends on the kids’ age & maturity, for many years we had an executor in case both of us died, in our case it was one of our siblings. Now that the kids are fully adult, we’ve appointed one of them executor.
I can answer from the point of view of one of the children.
My parents were divorced, and each of them was living alone when they died. My sister and I were their co-executors and their only heirs in both cases (except for small amounts that one of them left to each grandchild).
Their homes were simply part of their estates, which were to be split evenly between my sister and me. The estate (which meant us, with the guidance of our attorneys) sold the homes, just as we sold their cars and other possessions that we didn’t want, and the proceeds were split between us.
I can see that there might have been an issue if one of us had wanted to own either of their homes. Their homes were the largest portion of their estates; it wouldn’t have been possible to distribute their assets evenly if the houses hadn’t been sold. And the option of one of us buying out the other’s interest in a house existed only in one direction. (I could have bought out my sister’s interest, but she didn’t have the assets to buy out mine.)
For us, it was a moot point. My sister lives in California. I live in Maryland. We had no interest in owning our mother’s home in Florida or our father’s home in Connecticut.
We have to redo our estate planning. We probably will do a trust thing for our house, because I believe that will keep it out of Probate…right?
We did a living trust two years ago and our attorney did say that was the best way to keep from going to probate. Seems like there is some variability state by state.
Thanks for the answers. I have a will but plan to get it redone to account for this situation. The house is the biggest asset. I think it would be hard for either child to pay for (as in pay the property taxes) or take care of on her own and I’m pretty sure neither would want to live here again.
We have asked my niece who is an attorney a few years older than our kids if she’s willing to be an executor and she sgreed so we’ve appointed her with the kids as successor executors if she declines for any reason. They all get along well and she’s very conscientious.
I don’t know whether the kids will want our house or their grandparent’s home, rent them out or sell them.
Our “kids” are now 28 and 30 and both pretty fiscally responsible. They have never had occasion to handle as much as they will be likely to get when both H and I die. We are both likely to live some more decades.
We may revisit our estate attorney to modify our plans, as the kids age and perhaps marry and have grandkids. Neither of our kids currently live in HI but both have some interest in returning and MAY want the houses to live in or rent OR sell so they will have funds to buy something they prefer.
Can you clarify your concerns? I’m not sure how it’s different with or without a spouse. We have our home as part of our trust. So if both of us die it will be part of the trust that is split between our kids.
If I were still happily married, I might (or might not) be able to bequeath my half of the house to our children, but I wouldn’t. So while I would have to think about planning for what would happen if he died first or we died at the same time, I could also kick the can down the road and ignore those possibilities and just assume I’d be the first to go and he’d deal with things. Being single means I can’t do that.
My concern about the house is not how to split (everything will be split 50/50) but preventing aggravation for my children.
“I believe that will keep it out of Probate…right?”
Yes it should keep it out of Probate. When the Trust (I’m assuming revocable) is created, the county records are changed to reflect the Trust ownership of home. When last spouse dies the Trust becomes irrevocable. Although it probably varies by state, in CA, a successor Trustee (ST) can have an attorney draft a certificate of Trust (ie 1 maybe 2 page document) which would provide ST with authority to act on Trust matters (eg sale of house), thus avoiding Probate.
I’d add that ST would need to get a fed tax ID, open up a bank acct in Trust name. When sale goes through, check is made out to Trust, ST deposits $$ into bank acct from which funds can be distributed according to Trust.
After Dh died, I met with an estate & will attorney. I meet with him every 5 year to update the will & the trust–because the laws change over time. Everything went into a revocable living trust, including the house. Originally the executor was my brother because both children were under 21. Now that they’re older and launched into their careers, my younger D is executor. (Mostly because her sister is emigrating to another country and it was would be a major strain for her handle an estate settlement from halfway around the world even though there’s no probate.)
Neither kid lives near me and I doubt either of them would be interested in living in or owning my house. If I am still living in the house at the time of my death, the house will be sold and the money becomes part of the successor trust fund.
There is a successor trust with an appointed trust protector because the girls are in career fields (they’re both physicians) that can potentially expose them to expensive liability. The ST also prevents any inherited assets from becoming joint property in case of a divorce. Each girl has full access to her share of the trust funds upon written request to the trust protector. The ST has a investment manager (institutional investment office at my credit union), but manager can be changed at any time if both girls agree in writing.
I really appreciate all the comments. Thank you!
The best way to prevent aggravation is to make sure that
-you have a documented plan (will/trust/POA/Medical directives)
-they know where to find it
-you have your accounts listed somewhere they know where to find
-they know what funeral arrangements you do/don’t want
-you have thought through how the executor/trustee will pay expenses while things get sorted out, and you have provided for those funds to be readily available
but you can’t prevent all the aggravation, dealing with the administration of the estate is sometimes just a part of the mourning process.
WOWMom, thanks for the info about the ST
I redid my Trust 8 years ago. The attorney had the house put under the Trust, and I did the same for my bank account. The other option was to add my son’s name to the house, but since I already had a Trust, that made more sense.
My son has first chance to be executor, then the lawyer (who has been a friend for 28 years). Likewise, son has first chance at being health care, but second choice is my friend/MD. In both cases, I’m sure son will defer to these women. The lawyer can handle the sale of the house.
I’m a bit more compulsive about these matters than many people: I wrote my own will and health care and financial power of attorney documents approximately 15 years ago. I’ve updated them since but being single adds a new twist to the planning. (My ex doesn’t have any estate planning documents as far as I know, nor has he removed me as beneficiary of some assets. Sigh. But that’s his problem now, not mine.)
My mother’s trust sold the house. Eventually we’ll get our share of the money.
When I was in your situation, my attorney created a trust with no assets in it. Then we did a special deed that caused the house ownership to go to the trust if I died. The trust had no assets unless I died. Then the rules of the trust dictated what the rules were for splitting/distributing the assets. Most of my bank/investment assets also were changed to POD or benefiary to the trust.
My executor and trustee where the same person; I assumed they would sell the house.
Now I don’t have a house and moved to a new state. Will had to be redone. Without real property, attorney recommended getting rid of the trust. So I’ve give back and changed all my accounts to split between kids, who I think are old enough to inherit directly now.
One thing I hate is that it seems so hard to make a will generic so it doesn’t need repeated updating.
And I have never reminded my ex after 1 conversation right when we divorced and I proved him with all statements and info on his accounts that he should look at his beneficiaries. Won’t break my heart if he never gets around to changing them!
What happens to the trust if you move to another state? Do you have to redo the trust, too?