Reply to Leaving kids house upon death and spouse is alive

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[quote=Anonymous][quote=Anonymous]I see all kinds of issues with this arrangement.  Obviously, it depends on the state, but a first problem is that regardless of the name on the title of the second home, it is a marital asset.  You cannot give away rights that you don't own, and you cannot just take away your spouse's rights and property.  This situation clearly shows that the second home was bought with marital assets (the money from selling the first home).  This is not a situation in which the husband bought the home prior to marriage (e.g., inherited it from his family).  Also, there is inherent inequity since the husband, if he survived the wife, could proceed to sell the house or even get remarried and change the will to give the house to the new spouse.  I pretty confident that the wife, if she wanted to, could have that will invalidated after the husbands death.

I have seen situations in which the couple set up a trust (to be inherited by the kids) with ownership of the home going into the trust and the couple continuing to live in the home until their respective deaths.

The second issue is that you took a non-taxable event (spousal right of survivorship) and turned it into a potentially taxable event (inheritance of the home by kids) .  If the husband dies, the kids may owe a big tax bill, which may be tough to pay since they won't be getting any money from the home that cannot be sold until the wife passes.

Overall, I think there are much better estate planning options available.
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This makes sense. Maybe more will come out through our conversations as to why she agreed to this or perhaps how it was set up.[/quote]

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