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A House Divided: Avoid Estate Planning Disaster

by Rohan Mathew
Avoid Estate Planning Disaster

Your relative’s estate plan is a mess – but your family doesn’t know this yet. Planning isn’t really the problem: there is no planning. And if there’s no planning, then a house will pose a special challenge. Homes are often the biggest part of a decedent’s estate. Estate planning for the distribution of a home is frequently met with understandable reluctance – no one likes to contemplate his or her own passing. Such contemplation is even more difficult with respect to our homes.

Our homes have meaning – more than bank accounts, stocks or personal property. Our homes are the places where our children grow up, family gatherings are held, and where grandchildren bring joy. We work to make our homes places of comfort and safety.

We can feel the pain of Jesus – the longing for home – when he tells a follower that “the foxes have holes and the birds of the air have nests, but the Son of Man has nowhere to lay his head.” We know that these words bring more than one meaning – but we empathize with what is unsaid – that the homeless suffer and hurt.

Estate planning for homes is not without its challenges. Many adult children live in their parent’s homes. When a parent dies, the child – however old – living in the family home does not want to leave. Written estate plans can address this issue – maybe the child will be provided a life estate in the home – maybe a specified time of occupancy – maybe some additional money to move – whatever the resolution, the issue should be addressed.

Orlando probate lawyer Miles Jones has provided a good overview of how mistaken planning and no planning at all can create mischief and hostility among surviving family members. To get to the heart of the matter, it is necessary to understand certain property and family dynamics – circumstances common and familiar to estate litigators.

In a given estate case, a home may have a small mortgage or no mortgage at all. Family members rarely go to battle over a home that has no equity and is a much bigger liability than an asset.

Sometimes a family member – many times a parent, an uncle or aunt or brother or sister – completely fails to plan or neglects prior planning. A surviving spouse may fail to clear title to property after the death of the first spouse. Later, when the survivor dies, family members will have to resolve this – not always an easy task. It’s made all the more difficult by the inclusion of stepchildren, the absence of records, or squabbling siblings skeptical of any effort at leadership.

Plan ahead to ensure that your estate doesn’t erupt in a family feud.

A home within an estate may be the separate property of one spouse with a community interest established by a history of maintenance and bank payments with community funds. A single person may own the home – a person whose death reveals long-held family divisions.

Gifting of all or part of home interest brings estate scrutiny over the family member’s capacity to gift and/or whether undue influence played a part in the family member’s decision to gift. Disputed estate cases abound, with the gift-giver’s medical records identifying the existence of Alzheimer’s disease or moderate or severe impairment prior to the time of the gift.

Particular dilemmas arise when a formal estate plan or some type of other documents identify the homeowner’s desire that a family member live in the home after the home owner’s death. Such plans should be carefully crafted. If there is to be a life estate, who is to pay for the mortgage and ongoing costs of maintenance and taxes? Will the life tenant or the heirs who are to receive the property at the death of the life tenant pay these expenses?

Problems in an estate can quickly arise even when a house is willed to two or more people. One person may want to keep the house, while others want to sell it. One may want their sister in law to list the home, while another says that they should sell the house themselves. Some don’t want to sell this year or next. Others think that the house should be mortgaged, the money split, and the house rented. You get the idea. Disagreements come thick and fast.

Failing to plan for the disposition of a house in an estate plan is planning to fail. There is a better way – it involves some careful thought, along with a commitment to a decision. Just remember – it’s better to plan for the future than to leave the fate of your home to chance – and possibly to chaos.

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