Does my wife’s mother have a right to remain living in the home even though she was never added to the title?

Dear Len & Rosie,

My mother-in-law is 85 and is married to a man who is almost 90 years old. My wife is concerned that should her mother’s husband die before her mother, his family will want her to vacate the home in which she has lived with her husband for the past twenty-five years.

My wife’s step-father was previously married and was already a widower when he married my wife’s mother twenty-five years ago. Their residence was his own property from before the marriage.

Does my wife’s mother have a right to remain living in the home even though she was never added to the title? Does she have a right to any equity that has accrued in that property during their marriage?

John

Dear John,

Things are not looking so good for your mother-in-law. Everything her husband owned prior to their marriage is his separate property. He has the right to leave his separate property to anyone he wants, together with his half of the community property. If his home was already bought and paid for prior to the marriage twenty-five years ago, the home remains his and your mother-in-law won’t have any right to it if he doesn’t leave her in his will or trust.

If, however, there was a loan against the property when they got married, and they’ve been paying off the loan with their employment income, then a portion of the property will be community property, half owned by your mother-in-law, regardless of who is named on the deed. The amount of this interest is roughly based on the portion of the property actually purchased with community property. However, that won’t give your mother-in-law all of the property or a right to live there until her death.

Your mother-in-law’s concerns can be addressed by estate planning. Her husband and his heirs have a reasonable interest in protecting their family’s property, but it is unlikely that the husband will want his wife of twenty-five years tossed out on the street upon his death. He can, and should, update his will or trust to provide his wife with a right to reside in the property until her death. This way, she can be guaranteed a residence and her husband’s children can be guaranteed their inheritance.

Len & Rosie

The Beginnings of a Probate

Dear Len & Rosie,

My husband and I already have a trust for all our property and bank accounts. I’ve just inherited from my father and have put this money into bank accounts under my name only and in banks where my husband and I do not have joint accounts.

Our trust provides for an equal division among my son, my daughter and my stepson. I do not want to share my inheritance with my step son. He is already inheriting money from his mother and grandparents. I have listed my husband, daughter and son as equal beneficiaries if I die on my separate property accounts. Do I need a separate trust in my name only for my bank accounts or will my beneficiaries listed at bank be given the money without probate?

Bonnie

It’s natural for you to want to provide for your own children from your separate property. Most people don’t leave much to their step-children. If you had raised your step-son from when he was a child, you probably would cut him in for a share. Keeping your separate property in a different bank than where you and your husband keep your other accounts is a very good idea. If it was all at the same bank, there’s a good chance your husband could inadvertently gain access to your separate property accounts over the Internet.

Your method of designating pay-on-death beneficiaries for your separate property accounts will likely work. However, pay-on-death designations cannot properly take into account what should happen if your son or daughter were to die before you. If that happened, your husband and surviving child would receive the accounts and any grandchildren who survive their parent’s death will get nothing. That may not be what you want. Pay-on-death beneficiary designations are also a bad idea if you have a disabled child who would lose public benefits if he or she inherited money outright from you, or if you have a spendthrift child who can’t be trusted with managing an inheritance.

As an alternative, you could either create a revocable trust solely to hold your separate property, or you could amend the joint trust you created with your husband to distribute your separate property in the manner you wish upon your death. Most well drafted trusts for married couples allow either spouse to amend the trust alone with respect to that spouse’s separate property. If there’s a lot of money involved, you should not rely on pay-on-death accounts. But if your inheritance isn’t very large, it probably won’t make much sense to spent money creating or updating a trust just to deal with a modest inheritance. Just make sure to keep up with your beneficiary designations if there’s a change in your family, such as a death, or birth, or if a child becomes disabled.

And don’t forget to keep your separate property separate. That means you should not ever put any community property money, such as savings from your paycheck, into your separate property accounts.

Len & Rosie