Q&A with Loraine: Is a child who takes care of aging parents entitled to their house?

Question: I lived with and took care of my parents for 16 years. My brother and sisters did nothing to help me. Both of my parents are deceased now. Am I entitled to more rights to the house than my siblings?

Loraine’s Answer: Living with and caring for aging parents does not automatically give you greater rights to their house (or any other assets they owned). In general, unless either (A) your parents structured their estate planning documents to provide for you to receive a larger share than your siblings, or (B) one or both of your parents gave you an interest in their home or other assets (like bank or investment accounts) by adding you to the title before they died, then you should expect to receive the same interests and rights your siblings with receive with regard to your parents’ assets. Even if your parents promised you that you would receive a larger share or other compensation in exchange for your service to them, unless they put something in a legally binding, written format, those promises were empty.

If your parents wanted to compensate you for your dedicated service to them, they had a few basic options for doing so:

(1) They could have named you as a co-owner along with them, as joint tenants with rights of survivorship, on a given asset, such as the house or a bank or brokerage account. This option would have resulted in your receiving 100% ownership of that asset at the death of the surviving parent. Please note: This is often NOT the best option for various reasons, from the parent’s perspective, as it can result in the parent making potentially taxable gifts to the child (for example, when a new owner is added to real estate, the value of the interest in the real estate that owner receives is a gift by the original owner to the extent that the new owner does not pay full fair market value for the interest). It can also result in the asset becoming exposed to the child’s problems, such as potential creditors or a divorce.

(2) They could have named you as the beneficiary of a given asset, such as an IRA, a life insurance policy, or a taxable bank or brokerage account. This should also have resulted in your receiving ownership of the given asset at the surviving parent’s death. Using beneficiary designations to accomplish estate planning goals can be tricky, but it allows for the at-death transfer to occur while avoiding the lifetime gift and creditor/divorce exposure problems associated with option (1).

(3) Your parents could have structured their estate planning so that you received specific assets, a larger overall share of their assets than any of your siblings, or both of these, after the surviving parent’s death. For various reasons, this is generally the best way to address a desire to benefit children with different shares.

(4) Your parents could have entered a contract with you under which they would have paid you for your caregiving services. This contract should have been put in writing during their lifetimes, ideally before you began providing the services.

If your parents did none of these things, you are out of luck unless your siblings just happen to be grateful enough for the work you did to give you some of their shares.

Key Estate Planning Takeaway: A child who is serving as a live-in caregiver to aging parents does not automatically receive any special rights with regard to the parents’ house or other assets. If parents who expect to receive significant caregiving services from a child wish to compensate that child for the child’s service, then the parents must either ensure that those wishes are addressed in their estate planning or enter a written caregiving service contract with the child and pay the child for services during the parents’ lifetimes.

This “Q&A with Loraine” blog series features answers from Morgan + DiSalvo Partner Loraine DiSalvo to common questions. A key takeaway from each exchange highlights an important facet of estate planning.

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