Woman Wants Son To Inherit $1.2 Million Home, But Also Wants Husband To Live There

A woman recently wrote a letter to Quentin Fottrell of The Moneyist in search of advice on what to do with her $1.2 million home when she dies. She wants her son to inherit the home at some point, but also wants her second husband (who she’s currently married to) to continue living in it until he dies. What should she do?

Woman And Second Husband Signed Prenuptial Agreement

The unnamed woman, we’re going to call her Shelly (not her real name), is currently married to her second husband – who has never been married before. They don’t have any kids together, but Shelly has one adult son from a previous marriage.

Since the son (we’ll call him Randy) was an adult at the time of her second marriage, there was no need for her new husband (we’ll call him John) to adopt him. As of right now, everyone is happy, and everyone gets along – which is all she could ask for.

They Live In A Home Paid For And Maintained By The Wife

Shelly purchased the home before marrying John, but they now live in the house together – though she’s the one paying for the maintenance and upkeep of the property. The mortgage, of course, is in Shelly’s name – not John’s – and she plans on keeping it that way until she dies.

In fact, she’s adamant about paying for everything – the mortgage and upkeep of the home – using her own money to avoid any doubt that it’s her ‘separate property.’ Basically, as of right now, there’s nothing indicating that this is John’s property – and it’s all by Shelly’s design.

Here’s How The Woman’s Trust Is Currently Laid Out

If Shelly doesn’t make any changes to her trust, then her husband gains sole possession of the home – which she currently estimates to be worth around $1.2 million (after deducting the outstanding mortgage). She’s okay with this because she wants her husband to live in the house until he dies.

In addition to the home, her husband would also receive a monthly income from her pension – since he’s listed as a survivor and beneficiary to it. Shelly says the income would ‘more than cover the monthly mortgage payments,’ ensuring John could live with financial freedom after she passes.

She Wants Her Son To Inherit The House From Her Husband

While John (her husband) gets the house, Randy (her son) would receive all of the remaining assets – which Shelly estimates to be worth around $1.2 million (like the house). Unfortunately, this is where things get a little tricky for the family.

Shelly wants John to have the house until he dies, but she also wants her son to inherit the house after that. She has her husband’s word that he will pass the house onto the son when he dies, but it doesn’t leave her with a guarantee that her son will get it.

Unfortunately, She’s Left With More Questions Than Answers

Shelly concluded her letter with a series of questions that show just how big of a predicament she’s in. For example, even if her husband keeps his word and gives the home to her son when he dies, would it be considered an inheritance – since they’re not blood-related?

Would her son receive a step-up in basis? Would her husband be allowed to move when he retires, or would he be liable to continue living in the house? At the end of the day, her primary concern is making sure her son – and no one else – ends up in the house when her husband dies.

The Solution: Identify Your No. 1 Priority, Then Compromise

In his response, Quentin Fottrell warned the woman that she was ‘trying to be too many things to too many people’ and advised her to ‘set out your goals with your estate planning in order of priority.’ If her son is the No. 1 priority, start there – and then let everything else fall into place.

With that said, Quentin found it odd that she was so adamant about using her own money to pay for the mortgage and maintain the house, even though she planned on giving the house to her husband anyway. If she wants her son to have the house, and her husband to live financially free – she’s going to need to compromise

The Husband Can’t Have His Cake And Eat It Too

Quentin’s advice was to allow her husband to live in the home for the rest of his life (as a tenant for life), but reminded her to specify that he’s responsible for maintaining taxes and taking care of the property for as long as he lives there.

As far as giving her husband the option to sell the property or hand it off to someone else, Quentin warns that it only complicates things. “Trusts and wills cannot be all things to all people,” he said in his response. “But you are asking for trouble by allowing your husband to have his cake and eat it.”

Situations And Circumstances Are Liable To Change

Quentin also brought up a good point about situations and circumstances changing. As much as she wants to control what happens with the house in the future, there are some things she can’t control – such as relationships changing, stepsons and stepfathers falling out, and husbands getting remarried.

At the end of the day, a house that’s worth $1.2 million becomes a lucrative source of income when money is tight. If something unfortunate were to happen to the husband or if he wanted to start a new life elsewhere, there wouldn’t be much stopping him from selling it – if given the right to.

What About The Step-Up In Basis If Things Go As Planned?

Okay, so let’s say the husband stays in the house and then leaves it to the son – would the son receive a step-up in basis for the home? Well, it all depends on whether or not it’s specified in the husband’s will – which wouldn’t be a problem because heirs don’t necessarily need to be a biological descendent.

Anyone who inherits a house via a will, revocable trust, or transfer-on-death deed receives a step-up in basis. The problem is if the house goes through probate – at which point the court won’t consider the stepson an heir because they generally follow bloodlines. But whoever the court chose as the heir would receive a step-up in basis.

It All Depends On Who Passes Away First

To end his response, Quentin explained that this is all just hypothetical at this point – and it might not even matter, depending on who passes away first. According to a global study that covered 200 years of data, between 25% and 50% of men outlive their women counterparts – though women live 5-6 years longer than men, on average.

Quentin’s final advice was simple: “Create an estate plan that is rock solid, one that needs no room for maneuver.” As much as you want to make everyone happy, remember that it’s not always possible – and that’s okay. Set those priorities and do what’s best from the top down.