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.
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