Last column, I posed the example of a second marriage in which the husband moved into the house already owned by his new spouse. When she dies, what right does he have to continue living in that home?
If he continues to live there, what effect will this have on her children? The deceased spouse may have wanted to ensure the surviving spouse has a place to live, but have the home ultimately end up with her children.
If the home is left to the surviving spouse by a will, it becomes his property. There is nothing to prevent him from passing the home on to his own children. On the other hand, if the house is left to the children, there is no way to ensure that they will allow the surviving spouse to remain in the home.
There are at least a couple of ways the interests of both can be protected. One way is to use what is called a “life estate.” A person given a life estate in a home has the right to live in that home, but that right automatically ends when the person passes away. A life estate can include certain obligations. For example, the life estate can specify that his right to live there ends if he moves out of the home or fails to maintain it. It can even require that the person living there pay rent.
Whenever the life estate ends, either because the person passes away or fails to comply with the conditions, the property will transfer to whomever is given the “remainder” interest. In this way, the surviving spouse can be given a life estate in the home, and the children can be given the remainder interest. Both can receive what the deceased spouse wanted the surviving spouse and the children to have.
A similar result can also be accomplished with a trust, which I will discuss next column.
Come to a free, no obligation presentation to find out the simple steps you can take to protect yourself and your estate.