Anonymous
Post 12/14/2015 14:20     Subject: Leaving kids house upon death and spouse is alive
This was a pretty common arrangement way back in the day. Like the 1930s and earlier. Wifey couldn't be trusted to own anything outright. But like pp said, it's probably a tax/estate planning move. If there are enough other assets that she would not ever need to alienate (i.e., sell in fee simple) the property and their goal is that the children will inherit it one day, then why not?
Anonymous
Post 12/14/2015 11:39     Subject: Leaving kids house upon death and spouse is alive
Anonymous wrote: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.


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.
Anonymous
Post 12/14/2015 11:37     Subject: Leaving kids house upon death and spouse is alive
Anonymous wrote:What is her profession? I was in a very high risk medical field for a while, and during that time, we put everything into my DH & kids' names and wrapped into a fairly intricate set of trusts and llcs for credit protection.


Physiotherapist.
Anonymous
Post 12/14/2015 11:25     Subject: Leaving kids house upon death and spouse is alive
What is her profession? I was in a very high risk medical field for a while, and during that time, we put everything into my DH & kids' names and wrapped into a fairly intricate set of trusts and llcs for credit protection.
Anonymous
Post 12/14/2015 10:49     Subject: Leaving kids house upon death and spouse is alive
Anonymous wrote:Under what circumstances would you, if at all, agree to this? I know a couple who had a house, sold it, and bought a new one. The second house is in his name only but upon his death, the house goes to the kids with her having the right to live in it for as long as she wants to. He has not been married before and neither one have kids other than the three they share. When she told me she agreed to not owning the house after his death, I thought i would never agree to it. But maybe there's a circumstance where someone would agree. If so, can you please share? I didn't ask her because it's really none of my business.




have three children together.


They are generation skipping. If the wife inherits the house, THEN leaves it to the kids, they'll not have the house exemption the 2nd time, only the first. It's an estate planning move.
Anonymous
Post 12/14/2015 09:57     Subject: Leaving kids house upon death and spouse is alive
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.
Anonymous
Post 12/14/2015 07:13     Subject: Leaving kids house upon death and spouse is alive
Anonymous wrote:It is possible. My father remarried later in life, and left his house (with considerable equity) to his new wife. She left it to her kids. I think, if my father realized what would happen, he would have left it in a trust: she could live in it, but it then reverts to us.



OP here. In my case if she died first, he gets to leave the house to who he wants to. Presumably their kids, but he gets to choose. He leaves his wife no choice in the matter. It all seems like a double standard to me.
Anonymous
Post 12/14/2015 05:34     Subject: Leaving kids house upon death and spouse is alive
It is possible. My father remarried later in life, and left his house (with considerable equity) to his new wife. She left it to her kids. I think, if my father realized what would happen, he would have left it in a trust: she could live in it, but it then reverts to us.

Anonymous
Post 12/14/2015 00:01     Subject: Leaving kids house upon death and spouse is alive
Anonymous wrote:
Anonymous wrote:It may also be a long term care issue. If it is in the children's name, she may be eligible for benefits such as long term care/medicaid that has a 5 year old back of transferring money/assets.


Perhaps. Is this common?


NP here. That's why we did the life estate for my dad's house. It starts the "look back" clock for medicaid. Assets transferred less than five years before using medicaid are subject to "look back" and can be taken to pay for services before medicaid kicks in. Slightly different scenario than in the op, because it was just my dad - my mom died many years before. It also made things much easier when he did pass away, as the house was already in my and my sibling's name.
Anonymous
Post 12/13/2015 21:20     Subject: Leaving kids house upon death and spouse is alive
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Under what circumstances would you, if at all, agree to this? I know a couple who had a house, sold it, and bought a new one. The second house is in his name only but upon his death, the house goes to the kids with her having the right to live in it for as long as she wants to. He has not been married before and neither one have kids other than the three they share. When she told me she agreed to not owning the house after his death, I thought i would never agree to it. But maybe there's a circumstance where someone would agree. If so, can you please share? I didn't ask her because it's really none of my business.




have three children together.


So the wife would have a life estate in the house. My mother set this up after my father died, so I owned her house but she had a life estate, meaning she could live there as long as she wanted and she would be responsible for all bills, taxes etc as long as she lived there.

She has a friend who was remarried to a man who had adult children, and he had reworked his will etc to reflect that my mom's friend had a life estate in the house. His kids were very, very unhappy with this and wanted her out so they could sell the house. She agreed to move out, but got a lawyer to draft a buyout based on value of the house, value of the life estate, etc. And they did it.

What is your specific concern, OP? That the wife won't own the house?


I guess I'm trying to figure out if she gains anything from taking that deal. Because I don't see it. They bought the second house as a married couple. Not sure of the first house.


I am PP you responded to, and I don't know if I see her benefit either if they bought the house together. Why did she agree to the second house being in his name only? Maybe that ship has sailed, unfortunately...

If she's on the deed, I agree, it doesn't make sense to me because then she's paying bills, taxes etc on her own house with no direct (I understand the kids get the house from him anyway) benefit to herself (can't deduct mortgage interest, etc) or the kids. Maybe he is expecting her to die first, and doesn't want the kids to be able to take over, and not him? Maybe that's morbid of me, but I'm not a lawyer, and I don't understand it either. If only a real estate/ estate attorney could weigh in here...
Anonymous
Post 12/13/2015 21:14     Subject: Leaving kids house upon death and spouse is alive
Anonymous wrote:It may also be a long term care issue. If it is in the children's name, she may be eligible for benefits such as long term care/medicaid that has a 5 year old back of transferring money/assets.


Perhaps. Is this common?