Things to Consider When Granting a Right to Occupy Your Home in Your Estate Plan
From time to time in planning estates, one party owns a home, but it is the desire that another party, such as a surviving spouse or a child, will be able to remain living in the home, even if the owner dies first. This can be addressed either by granting a life estate to the person or by holding the home in trust for the benefit of the person. While there are advantages and disadvantages to each of these methods, in either case it is crucial that the obligations of the occupant and other parties are clear in the governing document.
Items to be addressed are going to be specific to each situation, but consideration should be given to each of the following:
Does the right of occupancy include the right to personal property located in the home?
Must the person actually and continually reside in the home and how is that defined?
Does the person have the right to allow another person or persons, such as a new spouse, to reside in the home with them?
Does the person have the right to lease/sub-lease any or all of the home?
Who is responsible for paying utilities?
Who is responsible for paying property taxes or other assessments?
Who is responsible for insuring the home?
Who is responsible for the repair and maintenance of the home?
Who is responsible for paying any mortgage payment?
If damage to the home requires an insurance claim, who determines if the property will be replaced?
If the home is being held in trust, what additional monies will be held to pay for any future obligations?
Are there inspection rights for a trustee or the ultimate future owner?
When does the right of occupancy terminate?
There are a host of issues that can come up if someone remains in occupancy of a home following the death of the owner. These should be carefully considered and addressed if your plan includes granting a right of occupancy rather than a gift of the home outright.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.