When counseling clients about estate planning, my primary objective is to help them maintain control of their estate. This includes helping clients ensure that, on their passing, their assets go to those they want to receive them. This result does not happen automatically.
Take the example of a man with children from a prior relationship who purchases a home with his girlfriend. Both his name and his girlfriend’s name are on the deed to the home and on the loan. When he dies, what will he have to pass on and to whom?
It is safe to say that the bank will ensure it gets paid. Whatever this man may own of the home, that interest cannot be passed on until the bank has been paid.
What if the loan had been paid off? This man can pass on his interest in the home, but how much of the home is owned by him and how much is owned by his girlfriend? If they were married, the question would be much easier to answer. Almost always, payments made by a married person are considered to be made by the “community,” with each spouse receiving credit for half of the payment. In other words, if the home was purchased and paid for with community funds, ownership is divided equally between married couples. However, if they are not married, there is no presumption that a payment is divided between the “community” because there is no marital “community.”
It is also important to know that, in Idaho, there is no such thing as a “common law” marriage. Therefore, neither party will be able to successfully claim they were married simply by living together.
When this man passes away, this will create questions that may be difficult to answer. One question will be, “How much of the home is owned by this man?” If he does not have a will, another question will be, “Who will receive his share of the home?”
As I will explain next column, the answer to both questions may be quite complicated. However, with some basic planning, the answers can be greatly simplified.
Come to a free presentation to find out more simple solutions to an effective estate plan.