I have an interesting case... My elderly father and step-mother are very financially incompetent. When they married, my father had a pre-nup drawn up to protect his house. Ten years later they sold that house and bought a new one. They put both names on the deed and the new mortgage. My father is now concerned that his wife will not be able to maintain the house after his death and wants to leave it to my brother and myself, but to allow her to continue to live there for the rest of her life. I understand that this can be accomplished with either a living trust, or a life estate, but I have two questions.
1. How can the entire house be left to the children when the wife has part ownership? Will she have to deed the property back to my father or both of them sell the property to the children?
2. How can the children ensure that the house will have the property taxes, insurance, maintenance, etc. paid, without having to have it come out of their pocket. My father's estate will not have any extra cash, but the wife will receive an ample amount in pensions and social security. Can the trust be contingent upon her paying the bills?
1 Answer from Attorneys
Question 1 more or less you're correct. If wife's name is on the deed she will have to agree and sign off on whichever option you choose.
As for paying the bills, you're right that's a real problem and I can't think of an easy solution. If wife doesn't pay the bills and taxes everyone will be in a world of hurt. I don't think that's a viable solution: having her occupancy of the house be contingent on wife paying the bills. What is the trustee going to do: evict her? Maybe; I don't see that as the optimum answer.
One possible solution is to have the wife submit to a voluntary guardianship, so that the court appoints one of the children as guardian of wife's property, with the authority to collect all money and then pay all bills, etc. That may be a tough sell to the wife and the court, but it may work.
I would say you and dad and step-mom need to have a sit down with a lawyer and get on the same page. Can the mortgage be paid off now? Tough case; you'll need to pay a lawyer for some creative thinking on this one.
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