|Cooper, Marlene S|
ESTATE PLANNING 101
Many parents have an adult child living with them. Sometimes it is for the benefit of the parents – a child can be a wonderful caregiver and provide much needed financial assistance. Oftentimes, however, the adult child is living with the parent because either he or she never left home in the first place or because he or she is unable or unwilling to establish a household of his or her own.
When parents pass away and leave adult children living in the residence, unfortunate events can occur. If the residence is inherited by siblings, those living outside the residence may want the property sold in order to receive their share of the parent's estate. This can create tension and conflict with those living in the house – they may be motivated to do almost anything to continue to live there. Under the law, without an agreement between the siblings or an estate plan which provides otherwise, persons living in the house have to either buy out the other siblings or move out so that the house can be sold. Also, during the period between the death of the parent and the sale of the house, the persons living in the house can be held liable for rent. I have seen families struggling and fighting with the issue of putting a brother or sister "on the street" so they can sell the house and split the inheritance. At best, it leads to hard feelings between the siblings. At worst, it leads to costly and time consuming lawsuits.
Here are some suggestions for parents who want to address this situation in advance:
1) Don't make the child living at home the Successor Trustee or Executor of your estate just because they are living with you. Choose someone because he or she has good business sense and follow through.
2) Make plans with your children ahead of time concerning what you want to happen to your home when you pass away. I recommend that families have open dialogue about the issue so that there are no surprises.
3) If the parents want the adult child living in the house to be able to remain there until the adult child passes away (essentially a "life estate"), then they need to figure out how the property will be maintained and how taxes and insurance will be paid. I have seen houses lost simply because the adult child living there fails to pay the mortgage or taxes and by the time the other siblings find out about the default, it is too late to save the property.
A revocable living trust can be used to address the issues raised above. A little planning now can save many headaches and heartaches in the future.
© 2013 by
|Copyright:||(c) 2013 Los Angeles Sentinel|