Question: My house deed is in my name only. I’m currently making mortgage payments on my home and am married. At my passing, I would like for my house to be given to my two adult sons, then to later generations (like a family home). What’s the best route for me to take to make sure my children receive my home when I pass?
Loraine’s Answer: You need to contact an experienced estate planning attorney and get some good estate planning in place. In general, if you are married but you do not want your home or other assets to pass to your spouse if your spouse survives you, you should strongly consider using a fully-funded revocable living trust (RLT) as part of your estate planning, along with a “pour over” Will that directs any assets that do fall into your probate estate to your RLT.
If you are a Georgia resident and you want to reduce the risk that your spouse will successfully challenge your estate planning, either by making a direct Will challenge or by making a year’s support claim against your estate, the best thing to do is have the RLT own as many of your assets as possible while you are alive, including the house. You can also try to get a post-nuptial agreement, if your spouse is willing to sign it, and have your spouse waive any inheritance or year’s support rights. However, this is rare, in my experience. I am assuming you don’t already have a prenup that does this.
As for leaving your house to your two children and trying to preserve it for future generations, that is a trickier question. If you leave it to the kids outright (either under a Will, an RLT, or under a transfer on death deed), they can decide what to do with it, which may include selling it and dividing the proceeds. They may find that sharing ownership of a single house is unworkable and undesirable over the long term.
If you want to prevent them from being able to sell the house, you will need to have your estate planning provide for it to be placed in a trust that is ideally controlled by a third party, not by your kids themselves. The trust will need to have funds to pay for the maintenance, insurance, property taxes, utilities, and repairs on the house, ideally, so you will also need to have your estate planning direct assets besides just the house to the trust. If possible, you should consider whether the trust can use the house to help generate income for the house’s support. For example, is it in a location that would make it desirable for use as a vacation rental, or does it have agricultural land around it that can be leased to a farmer or for deer hunting? The property’s potential for generating income and the extent to which you want a trust to be able to exploit that potential will likely drive how the trust for the house is constructed. You will also need to consider how the Trustee should allow the use of the house by your family. For example: Will there be a rotating schedule, a reservation system, or will the kids just have to draw straws if they both want the house at the same time? What if one child (or a grandchild) ends up wanting to live in the property full-time, and the other family members live far away and neither can nor really wants to use the house?
An experienced estate planning attorney should be able to help you consider those kinds of issues and how (and whether) you want to address them. There’s no perfect answer for ensuring that a particular piece of real estate remains in a family for multiple generations, but if you get good advice, you can get as close as you can, and you’ll know the risks associated with whichever option you choose.
Key Estate Planning Takeaway: To ensure that a home is passed on to specific beneficiaries and to ensure that it can be kept in the same family for multiple generations, careful estate planning is necessary. This may include using both a revocable trust and a testamentary trust, one to keep the house from becoming part of the owner’s probate estate and the other to ensure that the original owner maintains control over what is done with the home after that owner’s death.
This “Q&A with Loraine” blog series is inspired by answers from Morgan + DiSalvo Partner Loraine DiSalvo to actual user questions posted by individuals on www.avvo.com. This blog is a more in-depth response than can be given on their site under their character limits for answers. To view the original question and Loraine’s original response, click here.
