I often hear from clients serious concerns about what to do with their home in their estate plan. Often at the top of their list is the desire to preserve a residence for one or more of their adult children.
In Tennessee, if you leave your home in your will to your children, they will own the property as tenants-in-common. In that case, nothing prohibits one of them from requiring the home to be sold, even if the others do not agree, and even if one of them lives there at the time. (see previous post on “partition actions” here)
There are reasonable options for addressing this worry in your Last Will and Testament.
Establish a Trust: a Tennessee wills attorney can help you create a trust that holds your property according to the terms you set out. You can place the property in trust while you are alive (a living trust) or bequeath the property in trust in your will (a testamentary trust). You will name a trustee to administer the trust.
Some considerations: 1) The trust should state clearly how the house is to be maintained – property taxes, upkeep, etc. Will you fund the trust with enough capital to pay these costs? Will you require your children to contribute to this fund? 2) What if your children all agree that they would prefer to sell the property? You may be trying to help them, but if you are not careful, your trust could tie their hands in a detrimental way. The trust should take into account that possibility.
Leave a Life Estate: If you are concerned about a particular child having a place to live, you could bequeath the property to that child in a Life Estate. He or she would own an interest in the property during their lifetime, but the property would then pass to the beneficiaries you previously established in your will. The life estate owner would be responsible for property taxes and maintaining the home, but would not be authorized to sell or transfer the property without the agreement of those beneficiaries, who would also own an interest in the property.
Talk it Over: For maximum flexibility, leave the property to your children in your will as tenants-in-common and discuss with them your desire that they not sell it if one of them needs it for a home. Your will could even state your desire that it be used for that purpose. That conversation will not be legally binding, but it will impress upon them how important it is to you and communicate clearly your wishes.
Each of these options has drawbacks, but represent reasonable ways to accomplish your goal. If preserving a home for one or more of your children is a concern, you may want to discuss this goal with your children before you retain an attorney to draw up your will or establish a trust. Your children will likely have important perspectives that help you decide which approach works best for you.
Are there good reasons to transfer ownership of your home to your children during your lifetime, instead of in your will? Sometimes. Part Two of this series addresses those issues.
Please contact us today online or by calling 800.705.2121 to discuss your legal options.