It’s not always an easy situation when a spouse moves into the home of their spouse when they marry. Would the surviving spouse receive the home when the other dies? Does the home go to children from a previous marriage or previous arrangement? A good estate plan can resolve many potential problems in a remarriage situation, according to the Times Herald-Record, in “How to preserve your home’s value when remarrying.”
With poor planning, you might end up with your assets going to your second spouse and then, to his or her own children, leaving your own children empty-handed.
A common approach is to leave the surviving spouse the right to use and occupy the residence, with a provision in a trust or a will that the surviving spouse pays taxes and home insurance costs and maintains the house. The right to live in the house can be for a limited number of months or years or until they pass away or enter a care facility. When the surviving spouse dies, or the time limit is reached, or he/she leaves the house, the house is sold and the proceeds are divided among the beneficiaries of the owner.
There are other ways to provide more flexibility to the surviving spouse. If the house is too large or expensive to maintain, he or she may be given the right to use and occupy a substituted property, which may be purchased with the proceeds from the owner spouses’ home. Another arrangement allows the owner spouse’s home to be sold with the surviving spouse using the income from the proceeds of the sale of the house to pay for a rental. When the surviving spouse dies (or when the term expires), the children of the first spouse inherit what is left.
A few important things to consider: how well the surviving spouse will be able to maintain the house, either for financial or physical reasons. If the surviving spouse is not taking care of the house and it falls into disrepair, the children may have to file an eviction proceeding. If the trust or will does not specifically instruct the surviving spouse to pay for home maintenance, the children of the owner spouse would be responsible for those costs, and depending on how long the surviving spouse lives, that could be a large burden for a long period of time.
This situation requires thoughtful planning, with many “what if’s” to be asked. An experienced estate planning attorney who has worked with second marriages and home ownership issues, will be able to provide an objective view of the issues and the solutions.
If you have remarried and have not created an estate plan or have not updated your previous estate plan since your remarriage, contact us to schedule an appointment.
Reference: Times Herald-Record (Sep. 22, 2018) “How to preserve your home’s value when remarrying”