Life Estate for Father-in-laws New Wife?

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JoeRetire
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Re: Life Estate for Father-in-laws New Wife?

Post by JoeRetire »

PatrickA5 wrote: Thu Oct 21, 2021 11:12 amOn the positive side, they are very happy together and are glad they found each other late in life. She's been a blessing to us also since she's taking on the caregiver responsibilities that would have fallen on my wife.
That's very fortunate! I know how messy things could be otherwise.

Hopefully, whoever is in a position to do so will take care of her financially should FIL pass first, since she and he don't want to do so.

I hope things work out well for everyone for the remainder of their lives and beyond. Good luck.
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PatrickA5
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Re: Life Estate for Father-in-laws New Wife?

Post by PatrickA5 »

JoeRetire wrote: Thu Oct 21, 2021 11:18 am
PatrickA5 wrote: Thu Oct 21, 2021 11:12 amOn the positive side, they are very happy together and are glad they found each other late in life. She's been a blessing to us also since she's taking on the caregiver responsibilities that would have fallen on my wife.
That's very fortunate! I know how messy things could be otherwise.

Hopefully, whoever is in a position to do so will take care of her financially should FIL pass first, since she and he don't want to do so.

I hope things work out well for everyone for the remainder of their lives and beyond. Good luck.
Thank you!
littlebird
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Re: Life Estate for Father-in-laws New Wife?

Post by littlebird »

Steelersfan wrote: Wed Oct 20, 2021 6:48 pm
fortunefavored wrote: Wed Oct 20, 2021 6:20 pm Life estates are an utter, total nightmare. Do not, under any circumstance accept a life estate. Please google and read some stories before you go down that road. I would rather give up the house entirely than accept a life estate.
I've had two family members involved in separate life estates. Lawyers were involved in drafting the agreements. Both worked out exactly as intended.
As did one involving my grandmother and step-grandfather many decades ago.
delamer
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Re: Life Estate for Father-in-laws New Wife?

Post by delamer »

JoeRetire wrote: Thu Oct 21, 2021 10:58 am
PatrickA5 wrote: Thu Oct 21, 2021 9:08 am
JoeRetire wrote: Thu Oct 21, 2021 6:35 am
PatrickA5 wrote: Wed Oct 20, 2021 10:12 pm He won't pay for a lawyer. Thinks they're only out to get his money. We would offer to pay for the new will or trust or whatever, but he'd never agree to it.
Okay. He wants something "more legal" but isn't willing to have a lawyer involved. That says he isn't really willing to pay to protect his new wife.

Which means her only real protection will be the good will of the people who inherit the home.

I feel bad for her.
He is willing to spend up to $100 - which is more than I thought he'd pay LOL!

Reminds me of a time that I paid a $4.95 meal for him because he forgot his wallet. When we got back to his house, he looks in his wallet and sees a $5 bill and four $1 bills. Instead of giving me the $5 bill, he gave me the four $1s and proceeded to spend the next 30 minutes looking for 95 cents.
Ugh. I guess that tells us what he feels protecting his new wife is worth. This happens. It's very sad. I've seen a couple of second wives become financially devastated when their husband passes.

If your wife and SIL can't convince him to do the right thing here, everyone will just have to hope for the best.

If I were advising the new wife, I'd tell her to pressure her husband to rewrite the will. If she couldn't accomplish that, and she still wanted to stay married, she should purchase a life insurance policy on his life.
Life insurance on an 85-year-old with multiple medical conditions isn’t realistic.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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JoeRetire
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Re: Life Estate for Father-in-laws New Wife?

Post by JoeRetire »

delamer wrote: Thu Oct 21, 2021 12:06 pm
JoeRetire wrote: Thu Oct 21, 2021 10:58 am
PatrickA5 wrote: Thu Oct 21, 2021 9:08 am
JoeRetire wrote: Thu Oct 21, 2021 6:35 am
PatrickA5 wrote: Wed Oct 20, 2021 10:12 pm He won't pay for a lawyer. Thinks they're only out to get his money. We would offer to pay for the new will or trust or whatever, but he'd never agree to it.
Okay. He wants something "more legal" but isn't willing to have a lawyer involved. That says he isn't really willing to pay to protect his new wife.

Which means her only real protection will be the good will of the people who inherit the home.

I feel bad for her.
He is willing to spend up to $100 - which is more than I thought he'd pay LOL!

Reminds me of a time that I paid a $4.95 meal for him because he forgot his wallet. When we got back to his house, he looks in his wallet and sees a $5 bill and four $1 bills. Instead of giving me the $5 bill, he gave me the four $1s and proceeded to spend the next 30 minutes looking for 95 cents.
Ugh. I guess that tells us what he feels protecting his new wife is worth. This happens. It's very sad. I've seen a couple of second wives become financially devastated when their husband passes.

If your wife and SIL can't convince him to do the right thing here, everyone will just have to hope for the best.

If I were advising the new wife, I'd tell her to pressure her husband to rewrite the will. If she couldn't accomplish that, and she still wanted to stay married, she should purchase a life insurance policy on his life.
Life insurance on an 85-year-old with multiple medical conditions isn’t realistic.
It won't be cheap, but only the family can determine what is "realistic". Maybe the $2M in assets makes it realistic. Maybe not.

If you've ever read "Beyond the Grave, Revised and Updated Edition: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others)" the author comes up with all sorts of creative ways of dealing with cases like this. (I'm not saying any of them make sense for most folks.)
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PatrickA5
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Re: Life Estate for Father-in-laws New Wife?

Post by PatrickA5 »

Update after going to the Title company.

We all signed a General Warranty Deed with Joint Tenancy with Right of Survivorship with a Life Estate for new wife.

So, DFIL, DW, myself, SIL and new wife all had to sign as Grantors conveying the property to DFIL, DW and SIL. Basically, whatever ownership right myself and new wife had in the house (via state law) were conveyed away. New wife no longer has an ownership interest, but retains a Life Estate.

The Deed doesn't go into any detail of the multitude of "what ifs" that could arise. That would have probably cost more than $100 :moneybag

We have a separate signed agreement stating who pays what (HOA, Property Taxes, Insurance, Improvements, etc).

I would have preferred that my kids get shares in the house if DW predeceases SIL and/or DFIL, but I don't think that was a concern of his. Oh well.

Comments welcome.
fortunefavored
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Re: Life Estate for Father-in-laws New Wife?

Post by fortunefavored »

PatrickA5 wrote: Thu Oct 21, 2021 4:45 pm Update after going to the Title company.

We all signed a General Warranty Deed with Joint Tenancy with Right of Survivorship with a Life Estate for new wife.

So, DFIL, DW, myself, SIL and new wife all had to sign as Grantors conveying the property to DFIL, DW and SIL. Basically, whatever ownership right myself and new wife had in the house (via state law) were conveyed away. New wife no longer has an ownership interest, but retains a Life Estate.

The Deed doesn't go into any detail of the multitude of "what ifs" that could arise. That would have probably cost more than $100 :moneybag

We have a separate signed agreement stating who pays what (HOA, Property Taxes, Insurance, Improvements, etc).

I would have preferred that my kids get shares in the house if DW predeceases SIL and/or DFIL, but I don't think that was a concern of his. Oh well.

Comments welcome.
So there will be multiple remainder-persons for a life estate. Please consult an attorney of your own so you understand your rights/obligations/limitations, especially as it sounds like FIL's health isn't great. You will become a 3-way land lord with free rent and all the obligations of a property owner.

I hope it goes smoothly for you (or your wife, in this case.)
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JoeRetire
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Re: Life Estate for Father-in-laws New Wife?

Post by JoeRetire »

PatrickA5 wrote: Thu Oct 21, 2021 4:45 pm We have a separate signed agreement stating who pays what (HOA, Property Taxes, Insurance, Improvements, etc).
Does the agreement state what happens if one of those people don't do their job?
I would have preferred that my kids get shares in the house if DW predeceases SIL and/or DFIL, but I don't think that was a concern of his. Oh well.
Yup. That's probably on the >$100 side of the concern line.
Comments welcome.
Good luck. Hopefully you won't need it.
I'm glad to read that new wife was included in the process.
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retiringwhen
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Re: Life Estate for Father-in-laws New Wife?

Post by retiringwhen »

Having been through a situation where there was a second wife living in a house owned by the children of the deceased partner/parent, I have a little advice.

Regardless of the the mechanism (trust, life estate, stuff scribbled on a napkin, etc.) a few key principles need to be wrinkled out before the dad dies. I suggest your DW take this list and make it her own and put it front of everyone.

1.) What are the rules / requirements for the second wife to ensure continued rights to occupancy? It could be a simple as, she must spend at least one night every 30 days there, or maybe 180 days out of the the last 12 months. Related, what happens if she goes into rehab/nursing care with a possibility of returning home but after a long delay? Who has responsibility for the house during the rehab stay or during other extended absences?

2.) How are maintenance costs paid on the house? Who pays how much and what enforcement mechanisms exist to ensure payment? Does the tenant have maintenance responsibilities or do the children? Is it split somehow? Also, who pays what bills? Property taxes, Sewage (septic pumping, etc.), HOA assessments, etc.

3.) What if the tenant desires to make capital improvements such as remodel a bathroom? Who has what responsibility for payment and will any considerations be made to the tenant for any funds put in by them?

4.) What if one of the children can no longer hold up their part of the agreement? What if one of them dies?

5.) What if the tenant/2nd wife decides she does not want to live there anymore, will there be any consideration to her for abandoning a benefit early?

6.) The fact that the children are essentially being saddled with an open-ended financial, emotional and legal commitment, the dad should seriously consider setting up a trust that pays for the costs of the house while the second wife lives there. This may force a realization of the true costs / benefits of such an arrangement. $2,000-$3,000 to an estate planning lawyer will look cheap after this consideration even for a relatively inexpensive house.

7.) What happens to the contents of the house at time of the death of the father and then later at the time the wife leaves the house or dies? Who has what rights and responsibilities for the contents? Related, is there any way to identify his and hers property in the house?

As an aside, in our case it was all worked out in a trust that was setup at time death, but all the details were documented at the time of the 2nd marriage via updated Will and a prenup. The execution of the requirements of the trust became burdensome on the responsible child/remainderman, so they hired a corporate trustee. The cost was well worth it for all involved as it reduced stress, improved familial relations and overall took pressure off the situation. Believe me it was stressful. The house had normal issues, broken furnace, septic maintenance issues, broken patio door, general maintenance and repair, a badly needed facelift on the kitchen/dining room, etc. Each issue became a potential flash point due the inherently adversarial position of each party.
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PatrickA5
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Re: Life Estate for Father-in-laws New Wife?

Post by PatrickA5 »

retiringwhen wrote: Fri Oct 22, 2021 8:38 am Having been through a situation where there was a second wife living in a house owned by the children of the deceased partner/parent, I have a little advice.

Regardless of the the mechanism (trust, life estate, stuff scribbled on a napkin, etc.) a few key principles need to be wrinkled out before the dad dies. I suggest your DW take this list and make it her own and put it front of everyone.

1.) What are the rules / requirements for the second wife to ensure continued rights to occupancy? It could be a simple as, she must spend at least one night every 30 days there, or maybe 180 days out of the the last 12 months. Related, what happens if she goes into rehab/nursing care with a possibility of returning home but after a long delay? Who has responsibility for the house during the rehab stay or during other extended absences? These are good questions of which we don't have answers. Our guess is she won't stay there forever and will move back closer to her kids. She has indicated she's more than willing to sign away her Life Estate if she moves out, but obviously there could be reasons why she can't/won't.

2.) How are maintenance costs paid on the house? Who pays how much and what enforcement mechanisms exist to ensure payment? Does the tenant have maintenance responsibilities or do the children? Is it split somehow? Also, who pays what bills? Property taxes, Sewage (septic pumping, etc.), HOA assessments, etc. We have that worked out in a written agreement. If she doesn't pay something, I guess we will.

3.) What if the tenant desires to make capital improvements such as remodel a bathroom? Who has what responsibility for payment and will any considerations be made to the tenant for any funds put in by them? We will pay any maintenance (roof, etc) that are necessary to maintain the current state. It's very unlikely this 80+ year old great grandma will be wanting to redecorate extensively. While this house (1,400sft duplex in a mainly retirement community) isn't worth that much, it's the nicest place she's ever lived.

4.) What if one of the children can no longer hold up their part of the agreement? What if one of them dies? I guess it will fall on the remaining person.

5.) What if the tenant/2nd wife decides she does not want to live there anymore, will there be any consideration to her for abandoning a benefit early? No. At some point, if she's seriously considering moving out, we might help her do that just to get this monkey (house) off our back.

6.) The fact that the children are essentially being saddled with an open-ended financial, emotional and legal commitment, the dad should seriously consider setting up a trust that pays for the costs of the house while the second wife lives there. This may force a realization of the true costs / benefits of such an arrangement. $2,000-$3,000 to an estate planning lawyer will look cheap after this consideration even for a relatively inexpensive house. Not going to happen. I could see the pain in his eyes yesterday writing the $100 check.

7.) What happens to the contents of the house at time of the death of the father and then later at the time the wife leaves the house or dies? Who has what rights and responsibilities for the contents? Related, is there any way to identify his and hers property in the house? Other than family heirlooms (photos, etc) there is nothing in the house that DW and SIL want. We told new wife that she can keep all furniture, appliances, etc.

As an aside, in our case it was all worked out in a trust that was setup at time death, but all the details were documented at the time of the 2nd marriage via updated Will and a prenup. The execution of the requirements of the trust became burdensome on the responsible child/remainderman, so they hired a corporate trustee. The cost was well worth it for all involved as it reduced stress, improved familial relations and overall took pressure off the situation. Believe me it was stressful. The house had normal issues, broken furnace, septic maintenance issues, broken patio door, general maintenance and repair, a badly needed facelift on the kitchen/dining room, etc. Each issue became a potential flash point due the inherently adversarial position of each party. [url][/url]
Honestly, if new wife was a 60 year old gold digger, I'd be more concerned about all of this. While it will probably be a pain and cost money, I don't foresee a lot of conflict between new wife and the kids. She happily gave up her ownership for a Life Estate because that's what FIL wanted. I guess we'll see how this pans out. Thanks for taking the time to give all of these points.
SuzBanyan
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Re: Life Estate for Father-in-laws New Wife?

Post by SuzBanyan »

OP: Have you looked at applicable state law to see if new wife would entitled to a spousal share, notwithstanding anything in your FIL’s will? If so, she might happily give up her life estate for half of $2.2 million.
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PatrickA5
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Re: Life Estate for Father-in-laws New Wife?

Post by PatrickA5 »

JoeRetire wrote: Fri Oct 22, 2021 5:40 am
PatrickA5 wrote: Thu Oct 21, 2021 4:45 pm We have a separate signed agreement stating who pays what (HOA, Property Taxes, Insurance, Improvements, etc).
Does the agreement state what happens if one of those people don't do their job? No. DW and I will pay for these things if new wife and SIL don't. I will be glad to help new wife figure out how to set up payments, etc. She has very little experience with anything financial.
I would have preferred that my kids get shares in the house if DW predeceases SIL and/or DFIL, but I don't think that was a concern of his. Oh well.
Yup. That's probably on the >$100 side of the concern line.
Comments welcome.
Good luck. Hopefully you won't need it.
I'm glad to read that new wife was included in the process. Thanks. She was very thankful that DW and I were there yesterday to help her understand what's going on and is very relieved to know she won't be kicked out of her house.
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PatrickA5
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Re: Life Estate for Father-in-laws New Wife?

Post by PatrickA5 »

SuzBanyan wrote: Fri Oct 22, 2021 9:44 am OP: Have you looked at applicable state law to see if new wife would entitled to a spousal share, notwithstanding anything in your FIL’s will? If so, she might happily give up her life estate for half of $2.2 million.
No, we haven't looked into it and that's the big question in my mind. According to FIL, all of his investments have DW and SIL as beneficiaries or TOD/POD. I haven't seen anything to prove that though. His intent (and she knows this) is all of his assets go to the his kids (and anything she has goes to her kids). There was no pre-nup.
retiringwhen
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Re: Life Estate for Father-in-laws New Wife?

Post by retiringwhen »

Glad I could help. I will say, regardless of how good you get along now, the normal stresses will arise in the next phase. The only advice I can give is to get the ground rules nailed down before they need to be addressed. Best of Luck.

The positive side of all this, is that it sounds like your father and his wife are enjoying a good late life marriage, that is a good thing for everyone involved!
HomeStretch
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Re: Life Estate for Father-in-laws New Wife?

Post by HomeStretch »

Your spouse as part owner of the house and an estate beneficiary will only find out how good FIL’s estate plan is after his death.

Your spouse, as part owner of the house, should consider adding spouse’s name to father’s home insurance notices (such as renewals, claims, late payment, cancellation, coverage changes etc.) now so you can monitor that the home insurance is adequate, paid timely and remains in-force. You may also want to walk the property periodically to make sure it is well maintained and hazard free. You don’t want a potential claim to become a liability of you/your spouse.
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PatrickA5
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Re: Life Estate for Father-in-laws New Wife?

Post by PatrickA5 »

HomeStretch wrote: Fri Oct 22, 2021 10:05 am Your spouse as part owner of the house and an estate beneficiary will only find out how good FIL’s estate plan is after his death.

Your spouse, as part owner of the house, should consider adding spouse’s name to father’s home insurance notices (such as renewals, claims, late payment, cancellation, coverage changes etc.) now so you can monitor that the home insurance is adequate, paid timely and remains in-force. You may also want to walk the property periodically to make sure it is well maintained and hazard free. You don’t want a potential claim to become a liability of you/your spouse.
Good points. Thanks!
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