If a house is in a trust that will be given to the husband and the husband and wife want to “rent” before the trust is even activated (ie no one has died) how does the wife protect the money she is putting into the house as a rental as she will not be gaining anything if and when it goes into trust.
1 Answer from Attorneys
First off, the house needs to go into the trust before the trustor dies or the trustor has to have a will that puts the house into the trust upon death (but that would be stupid since it throws away all the tax and probate-avoidance reasons to have a trust in the first place). Otherwise the house never goes into the trust.
That said, until the husband becomes the beneficiary of the trust, neither he nor his wife have any interest or right in it. If they live in it and pay rent, that rent goes to the present owner the same as if it was a stranger who owned it. Rent money is paid for the right to live in a house. It's not an investment or "put into" the property. It's a cost of occupancy, same as gas and electric, cable and garbage service. It's no different than if you rent another house and the present owner rents the house in question to someone else. The wife's money put toward rent wouldn't be putting anything into the house.
The only way it would be different is if there is some arrangement between the husband and the owner that "renting" the house is actually paying for it to be left to him as a successor beneficiary of the trust. If current income is actually BUYING a future right to the house then that would be a different story and the wife would automatically be entitled to a community property share in that investment.