Will Question

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Always passive
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Will Question

Post by Always passive »

Question for those with expertise:
Issues: My daughter is divorced with two little kids. Upon our death (wife and I,) I would like to allow my daughter to have the benefit of part of our wealth by allowing her to live in or rent our properties (with have a home + rental, around $6-7m) but NOT sell them. Upon her death, I want the properties to pass to our 2 grand children. I am concern that someone may move in with her and then claim ownership of part of the properties and I do not feel comfortable trusting her with having the individual sign a prenuptial agreement.
Question: Is this wish legally possible? Is it only a matter of writing it in our will or more complicated? Do we need a trust?
Of course I will consult with a lawyer, but there are many opinions in this forum that I greatly value.
Grt2bOutdoors
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Re: Will Question

Post by Grt2bOutdoors »

Of course it’s possible. Title to the property doesn’t pass to the daughter, instead a vehicle like a trust retains title to it, she is permitted a life estate or something to that effect that allows her use of the property until her death upon at that time you’d like for title to pass to your grandchildren. Since the daughter doesn’t hold title to the property, no partner or other significant other can legally touch the property. What trusted party is going to be the trustee to ensure the terms of the trust are carried out?
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LeftCoastIV
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Re: Will Question

Post by LeftCoastIV »

Grt2bOutdoors wrote: Mon Oct 11, 2021 12:18 am Of course it’s possible. Title to the property doesn’t pass to the daughter, instead a vehicle like a trust retains title to it, she is permitted a life estate or something to that effect that allows her use of the property until her death upon at that time you’d like for title to pass to your grandchildren. Since the daughter doesn’t hold title to the property, no partner or other significant other can legally touch the property. What trusted party is going to be the trustee to ensure the terms of the trust are carried out?
I am not a lawyer, etc… but agree on a trust being a logical vehicle, potentially with a corporate trustee to take any family dynamics out of the management of the trust. I assume you will want to ensure the beneficiary cannot encumber the trust with liabilities as well.

I would also suggest thinking through potential scenarios where you may not like the outcome. For example, daughter marries but then passes away at young age. Properties flow to grandchildren, who are minors, so new husband makes the decisions. Could the new husband sell both properties at that point, as custodian?
mrpotatoheadsays
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Re: Will Question

Post by mrpotatoheadsays »

It should be possible to define this by a trust; it should be managed by a trustee.

But, what if your daughter wants to live in both the houses at the same time? There is no income from the real estate and the trustee and taxes must be paid. You either need significant money (other assets) in the trust or one of the homes will be sold by the trustee.

But, what if your daughter doesn't want to live in the homes? The homes could be poorly managed, fail to produce adequate income and turn to shambles.

But, what if your daughter dies and one of your grandchildren is a heroin addict? /in a 50/50 split, you need both owners signature to sell a property; one may refuse. If both agree to sell, the heroin addict throws a party.

The moral of the story is that you can't control humans from your grave. Your infatuation with real estate is excessive; others likely won't feel the same. Do this simple: Upon death, have the trustee immediately sell all the properties. Put the proceeds in two funds, equally. The trustee gets paid 50/50 from each fund. When the grandchildren reach a certain age or upon a certain date, they get the money to do anything they'd like to do with it; including buy a home of their own. Any grandchild convicted of drug crimes can forfeit their inheritance. If both grandchildren are convicted, the money can go to charity.
Blanco 5.0
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Re: Will Question

Post by Blanco 5.0 »

Being quite new to this forum I hesitate to offer advice. However, I am a retired lawyer(albeit not estates & trusts). See a lawyer who specializes in these matters.

Your age, daughters prospect re more kids and on and on impact all this. You will need a trust and choice of your trustee will be quite important. Any bank, lawyer etc. will charge an ongoing fee for trustee services.
exodusNH
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Re: Will Question

Post by exodusNH »

Always passive wrote: Sun Oct 10, 2021 11:38 pm Question for those with expertise:
Issues: My daughter is divorced with two little kids. Upon our death (wife and I,) I would like to allow my daughter to have the benefit of part of our wealth by allowing her to live in or rent our properties (with have a home + rental, around $6-7m) but NOT sell them. Upon her death, I want the properties to pass to our 2 grand children. I am concern that someone may move in with her and then claim ownership of part of the properties and I do not feel comfortable trusting her with having the individual sign a prenuptial agreement.
Question: Is this wish legally possible? Is it only a matter of writing it in our will or more complicated? Do we need a trust?
Of course I will consult with a lawyer, but there are many opinions in this forum that I greatly value.
The children are little, it's a pretty good guess that your daughter is relatively young. She may live 50 or more years.

Between your death and hers, who is going to maintain the properties? Over 50 years, each will need at least one roof, siding, maybe new windows, new HVAC systems, several sets of appliances, driveways repaved. Landscaping will need to be maintained, perhaps some older trees removed.

50 years from now, when your grandchildren are well-settled in their lives, maybe with grandchildren of their own. With their own retirement on the horizon, they will inherit a property perhaps somewhere far removed from where they have made their lives.

Unless one of these properties is on a lake or the ocean, where the opportunity to buy only comes rarely and expensively, your heirs will be better off if the properties are sold and the money made available to them.

If your intent is to allow your daughter to live rent free for X years, estimate what rent would be at the point of your death + inflation over that duration and set that amount aside for her share of the proceeds and then split the remainder between your grandchildren. Remember to keep the beneficiaries up to date if your daughter has more children, whether biologically hers, through adoption, or perhaps as a step parent.

I understand that you may balk at the latter, but if your daughter remarries someone with children, she may accept her new spouse's children as her own, especially if they're young. Excluding those children will cause a lot of strife for your daughter and current grandchildren during an already stressful time.
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Always passive
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Re: Will Question

Post by Always passive »

Thank you all. Very good inputs.
Unfortunately, the situation is complicated.
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Matahari
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Re: Will Question

Post by Matahari »

These are just very general suggestions/directions for you to explore further:

(1) you will need to create an irrevocable trust to hold title to the real property -- whether you transfer title while you are alive or after your death is something you will need to decide. The consideration is related to your lifetime Federal gift and estate-tax exemption and whether it is in your interest to transfer the value of the asset(s) out of your estate while you are alive. The present Federal estate tax exemption ($11.7M per person in 2021) will be reduced by half in 2026, barring any changes to the law. You may also have state estate-tax considerations. The gift to your grandchildren will be subject to the generation skipping transfer tax:

https://www.investopedia.com/terms/g/ge ... er-tax.asp

(2) look into a qualified personal residence trust -- this might be what you are looking for:
https://www.investopedia.com/terms/q/qu ... -trust.asp
https://www.thebalance.com/pros-and-con ... ts-3505394

(3) in addition to providing a residence for your daughter and, eventually, title to the property to your grandchildren, you would presumably need to provide liquid funds with which she can pay property taxes, upkeep and repairs so that ownership and value of the residence are maintained pending inheritance by your grandchildren. If you are concerned about protecting these funds, you should also make provision for these funds in an irrevocable trust.

(4) if you want your daughter to have the right of use and enjoyment of the property while she is alive but not own it, make sure that her children do not have the power to evict her because they are the beneficial owner pending her death. Likewise, you do not want to unintentionally convey to her a life interest in the property, which is an "ownership" interest significantly more than the right to use and enjoyment of the property and (I don't recall if this is the case) may be alienable/transferable by her.

All in all, you need to consult with a good trust and estate lawyer who is also able to advise you with regard to your options in partitioning rights to your real property.
rossington
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Re: Will Question

Post by rossington »

Always passive wrote: Sun Oct 10, 2021 11:38 pm Question for those with expertise:
Issues: My daughter is divorced with two little kids. Upon our death (wife and I,) I would like to allow my daughter to have the benefit of part of our wealth by allowing her to live in or rent our properties (with have a home + rental, around $6-7m) but NOT sell them. Upon her death, I want the properties to pass to our 2 grand children. I am concern that someone may move in with her and then claim ownership of part of the properties and I do not feel comfortable trusting her with having the individual sign a prenuptial agreement.
Question: Is this wish legally possible? Is it only a matter of writing it in our will or more complicated? Do we need a trust?
Of course I will consult with a lawyer, but there are many opinions in this forum that I greatly value.
If you completely feel that your daughter is capable then get the trust and name her the sole successor trustee. Put the limits on the properties specifically as you desire in the trust with no exceptions. I would definitely make sure she is comfortable with the specific property stipulations you are designating before moving forward with the trust.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.
deikel
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Re: Will Question

Post by deikel »

You can certainly do so

Since this arrangement would probably be alive for a significant time beyond your death, there will have to be some form of trust and trustee to do so and monitor. This trust can be established upon your death and out of your will (cheaper to set up initially, costs will incur after death and out of the estate) or based on a trust before your death (costs will be due right away and you could for example move the house out of your current assets)

Real estate of the primary residence is one of the typical sticky points and it is very typical that the original owner is assigning a high value on the property (which subsequent children or grandchildren may not at all). This is something to think about and get an emotional handle on. Unloved real estate consumes a lot of money to maintain and manage and its a very inefficient way to bequest value.

The second problem you touch is also very common, you can not fully control your money from the grave, you can only provide rough guidance that will be subject to interpretation. Your concern about your grandchildren receiving the intended inheritance is very valid, your daughter may re marry, may even (re) divorce, maybe have another biological child or gain children based on future marriage ect - so if you want your current grandchildren to receive money (or other values) you should spell this out in detail in your will and inherit it to them directly.

Another nasty case in this regard, your daughter has another biological child after you pass away and that third grandchild does then not get an inheritance ? A lawyer can help you phrase the will such to cover these odd cases as well (10% of money paid out yearly to all grandchildren over a time frame of 30 years or somesuch).

It is actually a good idea to create a trust (prior or after death via will) to release the inheritance slowly over decades (if large enough to justify) - that way, some life events can be covered (a typical late divorce in ones 40s), avoiding too much money at a young age, only allowing it for educational expenses - there is a myriad ways to go about this.

I would highly recommend a good family/elder law lawyer that has seen off life events enough to write up a good will, it about a thousand dollars for me back in the days and it felt like a great investment to cover my bases.
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bsteiner
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Re: Will Question

Post by bsteiner »

Always passive wrote: Sun Oct 10, 2021 11:38 pm Question for those with expertise:
Issues: My daughter is divorced with two little kids. Upon our death (wife and I,) I would like to allow my daughter to have the benefit of part of our wealth by allowing her to live in or rent our properties (with have a home + rental, around $6-7m) but NOT sell them. Upon her death, I want the properties to pass to our 2 grand children. I am concern that someone may move in with her and then claim ownership of part of the properties and I do not feel comfortable trusting her with having the individual sign a prenuptial agreement.
Question: Is this wish legally possible? Is it only a matter of writing it in our will or more complicated? Do we need a trust?
Of course I will consult with a lawyer, but there are many opinions in this forum that I greatly value.
In your Will, provide for your daughter in trust rather than outright.

You are correct that this is generally preferable to a prenuptial agreement.

Make it flexible. What if she wants to move to another part of the country? The trustees should be able to sell the property and buy a different one.
deikel wrote: Tue Oct 12, 2021 8:43 am ...
It is actually a good idea to create a trust (prior or after death via will) to release the inheritance slowly over decades (if large enough to justify) - that way, some life events can be covered (a typical late divorce in ones 40s), avoiding too much money at a young age, only allowing it for educational expenses - there is a myriad ways to go about this.

I would highly recommend a good family/elder law lawyer that has seen off life events enough to write up a good will, it about a thousand dollars for me back in the days and it felt like a great investment to cover my bases.
No one knows what the future will bring. The trust for your daughter should be flexible.

A trusts and estates lawyer would be a better fit than a lawyer in a different practice area.

You can get either good or low cost, but not both. Given the amount involved, I think good is preferable.
aristotelian
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Re: Will Question

Post by aristotelian »

Are you also going to mandate that the grandkids are not allowed to sell? Why not just leave them cash which they can use to buy real estate if they wish?
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colodane
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Re: Will Question

Post by colodane »

I think you are getting lots of good advice here.

Definitely put a lot of effort into selecting the trustee. If thing are "complicated" as you state, then don't name anyone in the family. Pay a professional to administer the trust.

I know that you feel like these properties are an "invaluable gift", but the recipients may rather view them as encumbrances. These days people relocate often for work purposes and may not want to be tied to a location just because you prefer it. Their tastes in home styles may also be vastly different than yours.

So keep it simple. Convert everything to $$ upon your death and then use the trust to gift it to whom you want and when you want.

Trying to control people from the grave isn't wise - especially two generations of people !!
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AndrewXnn
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Re: Will Question

Post by AndrewXnn »

Sadly, there will be property taxes on the property to consider.
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ChrisRx
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Re: Will Question

Post by ChrisRx »

I am just curious about why making it complicated? As others have pointed out, there are many scenarios that could come up.
Small Savanna
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Re: Will Question

Post by Small Savanna »

What you want to do may be possible - I'm not a lawyer. However, having much of your estate tied up in real estate that needs management and maintenance, and that your ancestors may not actually want to live in might not be the best solution. Why do you think your daughter or her kids will want to live in the family home? What if they move to another state?

I would think having the trust sell all the real property and convert everything to cash or annuities might be better. The grandkids in particular would rather have money for tuition and for starting their own life wherever they end up living.
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Re: Will Question

Post by tibbitts »

Always passive wrote: Tue Oct 12, 2021 12:32 am Thank you all. Very good inputs.
Unfortunately, the situation is complicated.
Unless you explain what's complicated it's possible that nobody is addressing the most important issue(s.)
neverpanic
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Re: Will Question

Post by neverpanic »

Always passive wrote: Sun Oct 10, 2021 11:38 pm Question for those with expertise:
Issues: My daughter is divorced with two little kids. Upon our death (wife and I,) I would like to allow my daughter to have the benefit of part of our wealth by allowing her to live in or rent our properties (with have a home + rental, around $6-7m) but NOT sell them. Upon her death, I want the properties to pass to our 2 grand children. I am concern that someone may move in with her and then claim ownership of part of the properties and I do not feel comfortable trusting her with having the individual sign a prenuptial agreement.
Question: Is this wish legally possible? Is it only a matter of writing it in our will or more complicated? Do we need a trust?
Of course I will consult with a lawyer, but there are many opinions in this forum that I greatly value.
What state is this property in?

IANAL, but given that you don't trust your daughter, what makes you think you can rely on her to manage the upkeep of $7M worth of real estate? I know it's normal to have dreams of future heirs inheriting a great estate generationally, but it's a mistake to assume little kids of today will hope to inherit real property you currently own at some point 50+ years in the future.
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Wiggums
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Re: Will Question

Post by Wiggums »

A lot of good comments for you to consider. I think you must consider the fact that things might not go as planned in your mind. You stated that the situation is complicated, but so are your wishes for your estate. I think it is very unlikely that your heirs will value the property the same way that you do. My cousin inherited a multi million dollar home. He sold it because the house was several states away and his salary didn’t come close to supporting the ongoing home maintenance costs. additionally, not everyone has the same love for real estate or the desire to move.
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Re: Will Question

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