Leaving house to kids with a surviving spouse

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PhilSarah
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Leaving house to kids with a surviving spouse

Post by PhilSarah » Tue Oct 09, 2018 3:02 pm

Greetings! I have been following this forum for years, and learned more than I ever thought I would. Was wondering if your collective wisdom could help us with something that my fiancé and I are discussing.

One liner: After one spouse passes away what's the best way to leave the house to the kids but not inconvenience the surviving spouse too much, and give them a few months to move?

Long and boring version. We both are going into our second marriage after failed firsts, been together almost a decade, and we both have adult kids from previous marriages 3 for me 1 for her all in late 20s /early 30s. We are both in our sixties and have about the same income and assets. We split everything, care deeply about each other, are on the same page about money, and want to leave what each of us brought in to our kids when we pass. Now for the issue - her son sadly goes to any length to blow everything on drugs and alcohol. The house we live in is in my fiancé name (we split all expenses). If I go first no issue my boys will get my money but they like her and will help her out if needed. They make good money and told me they don't need it anyway and to spend it and be happy while I am alive. But if she goes first, her kid will get her money and her house which i totally agree with but we worry he will evict me as soon as he can. Both fiancé and I are in remission and there's no telling what the future will bring and if we can pack up and move in a hurry if we are hospitalized or in treatment. She wants to do the right thing by me and also by her son. Can she will that her house to him but that I have say 6 months to move out? Without her I will probably be in a smaller place as I am a bit of a minimalist and don't need the yard and the large house. I have no desire to shop and she is happy to have me take some furniture and stuff, do we need to call that out? We have a mix of his hers and ours in the house now. We are not sure if leaving a house to someone also means leaving furnishings in the house. I don't want or need lot stuff but I will probably want some sentimental and things like a bed, couch etc.

I searched the forum for answers and while there's a lot of input, nothing fits our situation exactly. TIA.

Phil

Saving$
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Re: Leaving house to kids with a surviving spouse

Post by Saving$ » Tue Oct 09, 2018 7:33 pm

IANAL, however:

The things in the house do not "go with" the house. The house is an owned item (real estate), and the things in it are owned items. The simple way to deal with it in this situation is to leave all personal belongings to the surviving spouse. You can make exceptions for certain items and specify those go to specific people, or you can just make your wishes know and trust the surviving spouse to make sure those individuals get those things.

You may be able to specify in the will that the executor should allow the surviving spouse to occupy the house at $0 rent, and pro-rata cost of taxes, and all utilities for 6 months. Then make sure you select the correct executor (ie not the kid who spends money on drugs and alcohol).

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Watty
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Re: Leaving house to kids with a surviving spouse

Post by Watty » Tue Oct 09, 2018 7:38 pm

You might want to put the house into a trust that will control what happens to it.

Leemiller
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Re: Leaving house to kids with a surviving spouse

Post by Leemiller » Tue Oct 09, 2018 8:05 pm

You need legal advice specific to your state. Some states have restrictions on how much spouses can disinherit each other. Generally, sounds like a terrible idea and would cause the adult child harm to leave him an asset that will go to drugs. A trust would help with that. Also, you could get a life estate in the home to revert once you pass to the adult child.

Dottie57
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Re: Leaving house to kids with a surviving spouse

Post by Dottie57 » Tue Oct 09, 2018 10:56 pm

Leemiller wrote:
Tue Oct 09, 2018 8:05 pm
You need legal advice specific to your state. Some states have restrictions on how much spouses can disinherit each other. Generally, sounds like a terrible idea and would cause the adult child harm to leave him an asset that will go to drugs. A trust would help with that. Also, you could get a life estate in the home to revert once you pass to the adult child.
This.

PhilSarah
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Re: Leaving house to kids with a surviving spouse

Post by PhilSarah » Wed Oct 10, 2018 11:50 am

Thanks I appreciate all your input. Good to know leaving the house does not include the contents, and yeah dealing with that separately makes sense. We are in IL. From what I understand of the law yeah we will be entitled to a third of the money but can waive it. I have no interest in getting her money so was just going to waive it and she was going to do the same.

I should have clarified earlier - the house is maybe a third or less of the total assets she will leave to her son so unfortunately he will have money to blow even without selling it. His dad is well off too. I don't want to sound like a grumpy step father he is not a bad kid or an addict just parties a lot young and reckless even though he is almost 30, and we are hoping he will find his way by the time we die and he inherits. Just don't think he will ever treat me as anything other than the guy who took away his mom's full attention from him so we thinking he will try to evict me if something happens to her just out of pettiness. The trust is a good idea. I will run it by her. I have to be careful to not step on toes becaus it's her boy and her money. If not what if I just give him the fair market value of the house so then I can take my time moving to a smaller place and then sell it. Is this something you guys would recommend. If I end up giving him a bit more oh well if that makes it easier on everyone.

Thanks all.

ResearchMed
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Re: Leaving house to kids with a surviving spouse

Post by ResearchMed » Wed Oct 10, 2018 11:58 am

PhilSarah wrote:
Wed Oct 10, 2018 11:50 am
Thanks I appreciate all your input. Good to know leaving the house does not include the contents, and yeah dealing with that separately makes sense. We are in IL. From what I understand of the law yeah we will be entitled to a third of the money but can waive it. I have no interest in getting her money so was just going to waive it and she was going to do the same.

I should have clarified earlier - the house is maybe a third or less of the total assets she will leave to her son so unfortunately he will have money to blow even without selling it. His dad is well off too. I don't want to sound like a grumpy step father he is not a bad kid or an addict just parties a lot young and reckless even though he is almost 30, and we are hoping he will find his way by the time we die and he inherits. Just don't think he will ever treat me as anything other than the guy who took away his mom's full attention from him so we thinking he will try to evict me if something happens to her just out of pettiness. The trust is a good idea. I will run it by her. I have to be careful to not step on toes becaus it's her boy and her money. If not what if I just give him the fair market value of the house so then I can take my time moving to a smaller place and then sell it. Is this something you guys would recommend. If I end up giving him a bit more oh well if that makes it easier on everyone.

Thanks all.
You wrote "...what if I just give him the fair market value of the house so then I can take my time moving to a smaller place and then sell it...".

If you are considering this, or *anything*, that is not part of a formal trust arrangement, please don't.
Even with the best of intentions and no known ill will, these things can go very wrong, especially when emotions are high (after losing a parent, and a spouse, etc.).

Discuss this and any specifics with the attorney who will be drawing up the trust. She/he should have a variety of suggestions, but you'll both find a solution that works for the two of you and your children.
Just make it all very explicit, including time limits (if any).

And try to attend to this soon. Life can sneak up on one, unfortunately.

RM
This signature is a placebo. You are in the control group.

stan1
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Re: Leaving house to kids with a surviving spouse

Post by stan1 » Wed Oct 10, 2018 12:45 pm

You (and she) needs to be working with an attorney. You are not describing a "typical" situation that would let you use an online service or do it yourself software.

delamer
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Re: Leaving house to kids with a surviving spouse

Post by delamer » Wed Oct 10, 2018 1:11 pm

ResearchMed wrote:
Wed Oct 10, 2018 11:58 am
PhilSarah wrote:
Wed Oct 10, 2018 11:50 am
Thanks I appreciate all your input. Good to know leaving the house does not include the contents, and yeah dealing with that separately makes sense. We are in IL. From what I understand of the law yeah we will be entitled to a third of the money but can waive it. I have no interest in getting her money so was just going to waive it and she was going to do the same.

I should have clarified earlier - the house is maybe a third or less of the total assets she will leave to her son so unfortunately he will have money to blow even without selling it. His dad is well off too. I don't want to sound like a grumpy step father he is not a bad kid or an addict just parties a lot young and reckless even though he is almost 30, and we are hoping he will find his way by the time we die and he inherits. Just don't think he will ever treat me as anything other than the guy who took away his mom's full attention from him so we thinking he will try to evict me if something happens to her just out of pettiness. The trust is a good idea. I will run it by her. I have to be careful to not step on toes becaus it's her boy and her money. If not what if I just give him the fair market value of the house so then I can take my time moving to a smaller place and then sell it. Is this something you guys would recommend. If I end up giving him a bit more oh well if that makes it easier on everyone.

Thanks all.
You wrote "...what if I just give him the fair market value of the house so then I can take my time moving to a smaller place and then sell it...".

If you are considering this, or *anything*, that is not part of a formal trust arrangement, please don't.
Even with the best of intentions and no known ill will, these things can go very wrong, especially when emotions are high (after losing a parent, and a spouse, etc.).

Discuss this and any specifics with the attorney who will be drawing up the trust. She/he should have a variety of suggestions, but you'll both find a solution that works for the two of you and your children.
Just make it all very explicit, including time limits (if any).

And try to attend to this soon. Life can sneak up on one, unfortunately.

RM
Good advice.

Another potential situation — although low probability — is that you and your wife die at the same time (like in a car accident).

You need to protect your heirs in terms of your personal belongings in the house in that situation, even if you trust your wife to get things to your children if she survives you.

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Watty
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Re: Leaving house to kids with a surviving spouse

Post by Watty » Wed Oct 10, 2018 1:20 pm

PhilSarah wrote:
Wed Oct 10, 2018 11:50 am
....she will leave to her son so unfortunately he will have money to blow even without selling it.
A trust could be appropriate for handling this situation too.

I know little about them but they are called spendthrift trusts.

https://en.wikipedia.org/wiki/Spendthrift_trust

The kid does not need to know about the trust until after she dies which would eliminate a lot of drama. While they might be upset at first when they are 80 and living on social security they would be glad to have it. The trust could also be set up to do something like buy a house for the kid to live in but the house would be in the trusts name so the kid could not tap the home equity.

FoolMeOnce
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Re: Leaving house to kids with a surviving spouse

Post by FoolMeOnce » Wed Oct 10, 2018 1:24 pm

PhilSarah wrote:
Wed Oct 10, 2018 11:50 am
I should have clarified earlier - the house is maybe a third or less of the total assets she will leave to her son so unfortunately he will have money to blow even without selling it.
A trust can take care of this, too.

bsteiner
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Re: Leaving house to kids with a surviving spouse

Post by bsteiner » Wed Oct 10, 2018 1:30 pm

PhilSarah wrote:
Wed Oct 10, 2018 11:50 am
... the house is maybe a third or less of the total assets she will leave to her son so unfortunately he will have money to blow even without selling it. His dad is well off too. I don't want to sound like a grumpy step father he is not a bad kid or an addict just parties a lot young and reckless even though he is almost 30, and we are hoping he will find his way by the time we die and he inherits. ...
Our clients almost always provide for their children in trust rather than outright, and certainly where there's a reason to think that the child might not be able to handle receiving the assets outright.

rterickson
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Re: Leaving house to kids with a surviving spouse

Post by rterickson » Wed Oct 10, 2018 3:08 pm

Read 'Beyond the Grave' by Jeff Condon.

He talks about all of the things that can and do go wrong in leaving property to heirs, and how properly devised trusts can help. You'll see your situation in several of his examples (second marriages, multiple 1st families, kids who can't handle money).

PhilSarah
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Re: Leaving house to kids with a surviving spouse

Post by PhilSarah » Wed Oct 10, 2018 3:13 pm

I sincerely appreciate all the helpful replies. You've given me a lot to think about.

I started this thread thinking about myself rather selfishly but you guys made me start thinking about her son welfare instead. A trust might be just the thing to protect him from himself but don't know if I can sell this. She's rather anti-lawyer her ex was a lawyer and was a royal pain for her so not sure if I will win this battle. Plus her son is already notnon good terms with her and could turn even more hostile when he finds out, can keep it quiet until she passes and deal with it, but frankly I'm a bit of a chicken too but yeah I gotta deal with it. I'll plant the seed of consulting an estate lawyer. What else? SI really don't think she will say yes to going to a lawyer anytime soon. Should we still do DIY wills in the meanwhile because as one of you smart people said you never know what life will bring. All investments have beneficiaries anyway so it's really just a few things like bank accounts and of course the house and personal property that we were going to address in the will. Then again we didn't do anything all these years so maybe I should just wait and see If she can get over her distrust of attorneys. As I said she really just wants to do right by him and by me, as I do by her and my kids so no conflict or such.

Again to each of you who responded my heartfelt thanks. You provide perspective that is hard for me to have.

delamer
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Re: Leaving house to kids with a surviving spouse

Post by delamer » Wed Oct 10, 2018 3:29 pm

PhilSarah wrote:
Wed Oct 10, 2018 3:13 pm
I sincerely appreciate all the helpful replies. You've given me a lot to think about.

I started this thread thinking about myself rather selfishly but you guys made me start thinking about her son welfare instead. A trust might be just the thing to protect him from himself but don't know if I can sell this. She's rather anti-lawyer her ex was a lawyer and was a royal pain for her so not sure if I will win this battle. Plus her son is already notnon good terms with her and could turn even more hostile when he finds out, can keep it quiet until she passes and deal with it, but frankly I'm a bit of a chicken too but yeah I gotta deal with it. I'll plant the seed of consulting an estate lawyer. What else? SI really don't think she will say yes to going to a lawyer anytime soon. Should we still do DIY wills in the meanwhile because as one of you smart people said you never know what life will bring. All investments have beneficiaries anyway so it's really just a few things like bank accounts and of course the house and personal property that we were going to address in the will. Then again we didn't do anything all these years so maybe I should just wait and see If she can get over her distrust of attorneys. As I said she really just wants to do right by him and by me, as I do by her and my kids so no conflict or such.

Again to each of you who responded my heartfelt thanks. You provide perspective that is hard for me to have.
You might try looking up what your state’s law is for someone who dies intestate, and show that information to your wife. Depending on what you find, that might be a motivator for her to get a will through a lawyer.

Doing the wills on your own could conceivably make matters worse, not better.

I strongly believe that “you don’t know what you don’t know” in these situations.

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Watty
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Re: Leaving house to kids with a surviving spouse

Post by Watty » Wed Oct 10, 2018 3:40 pm

PhilSarah wrote:
Wed Oct 10, 2018 3:13 pm
All investments have beneficiaries anyway so it's really just a few things like bank accounts and of course the house and personal property that we were going to address in the will.
My understanding is that the investments could be controlled by a trust too, but that has to be done just right so that is not something you would want to try with a DIY will.
PhilSarah wrote:
Wed Oct 10, 2018 3:13 pm
She's rather anti-lawyer .......
A couple of hours with a lawyer now to set things up right could save months of people have to deal with lawyers to settle her estate.

bsteiner
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Re: Leaving house to kids with a surviving spouse

Post by bsteiner » Wed Oct 10, 2018 3:47 pm

PhilSarah wrote:
Wed Oct 10, 2018 3:13 pm
... A trust might be just the thing to protect him from himself but don't know if I can sell this. She's rather anti-lawyer her ex was a lawyer and was a royal pain for her so not sure if I will win this battle. .... Should we still do DIY wills in the meanwhile because as one of you smart people said you never know what life will bring. All investments have beneficiaries anyway so it's really just a few things like bank accounts and of course the house and personal property that we were going to address in the will. ...
If her ex had been a dentist would she not go to a dentist if she had a pain in a tooth?

She could probably do the Will herself. Likewise, she might be able to fill a cavity in her tooth herself by finding a YouTube video on how to fill a cavity. But just as I think it's worth letting a dentist fill a cavity, I think it would be worth the few thousand dollars to work with a good lawyer.

It's more than the bank accounts, house and tangibles. If she keeps the named beneficiaries on the investment accounts, they'll go outright rather than in trust. The lawyer will tell her not to have beneficiaries except on life insurance and retirement benefits, to have his share of any life insurance and retirement benefits go to him in trust rather than outright, will know the special rules governing trusts that receive retirement benefits, and will make sure to provide a separate set of trusts in her Will, identical except for those requirements, to receive the retirement benefits.

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