A common issue in second marriages or where couples are not married is what will happen to the family home on the death of the first person. This is especially true if only one person is on title to the real property.

There are a couple of different ways to handle this issue. One option is for the surviving spouse or partner to have a right to occupy the property during the remainder of their lifetime. In this case, the surviving spouse or partner would not have any ownership interest in the real property and would not be on title to the real property. Usually, during the period of occupancy, title to the real property is held by the trustee of deceased person’s trust. The right to occupy is a personal right and therefore cannot be sold or transferred. The person with the right to occupy may or may not have responsibility for expenses related to the property. The right to occupy is also sometimes used to help adult children who need additional time to save money or resolve other issues.

A second option is for the surviving spouse or partner to have a life estate in the real property. Unlike a right to occupy, a life estate is a form of legal title to the property which the holder can sell. If the spouse or partner needs to move, they then have the “right” to sell their interest in the real property i.e. the value of remaining life to a third party. Depending on the relationship with the other beneficiaries, the couple may want the surviving spouse to have a life estate in order to avoid any dispute with remainder beneficiaries as to the rights of the surviving spouse.

Whether you choose to include a right to occupy or life estate in your estate plan, it is very important to address issues surrounding the occupancy. The most common issues are the payment of expenses on the property, who may occupy the property, what will happen during any period of absence and the right to sell the property if the surviving spouse only has a right to occupy the property. Given the issues involved, the couple should consider having an agreement separate and apart from the owner’s trust outlining the intentions of the parties which can be signed by the party who would have the right to occupy or be receiving the life estate interest.

If you have any questions regarding an existing Trust or would like to discuss adding the right to occupy or life estate interest to your Trust, I see people every day for a FREE 30 minute consultation in Walnut Creek and Brentwood.

This article provides only general legal information, and not specific legal advice. Information contained is not a substitute for a personal consultation with an attorney. LAW OFFICE OF JOAN M. GRIMES, PHONE (925) 939-1680 1600 S. Main Street, Suite 100, Walnut Creek, CA 94513 © 2015 Joan Grimes

People often ask me what the most common Estate Planning mistakes are. There are 5 mistakes that are recurring. They are:

1. No Estate Plan. The most common mistake is no Estate Plan. No Will, no Trust, no provision for guardianship of minor children, no Healthcare Directive in the event of illness, no Power of Attorney which would allow for bills to be paid. It is so sad to see children coming into my office needing a conservatorship for a parent because there was no Trust providing for incapacity.

2. The Estate Plan is not Current. Most existing Estate Plans that I see are out of date and provide for AB/By-Pass Trust which is no longer necessary for 99% of the people. It is very important that you amend a Trust with AB/By-Pass Trust provision prior to the incapacity of a spouse. If a spouse does not have capacity to amend the Trust, it is too late to remove AB/By-Pass trust provision. Also, make sure your Estate Plan still reflects your desires. Are their new grandchildren you wish to provide for, should there be a Special Needs Trust for any of your beneficiaries?

3. No Government Benefit Planning provisions. Most existing Trusts that I see do not have any provision for Government Benefit provisions. If there is any possibility that you will need government assistance such as skilled nursing, your Trust should include the power for your Trustee to deal with governmental agencies and to apply for benefits such as Social Security, Medicare, Medicaid and other services.

4. Failure to put Assets into Trust. The failure to put assets into the Trust is the most common mistake for all Revocable Living Trusts. Real property must be put into the Trust through a Deed that is recorded with the county recorder. Bank accounts must be in the name of the Trust or they will be subject to Probate unless there is a beneficiary designation on the account.

5. Failure to have Beneficiary Designations on Assets. To the extent that assets are not going into the trust, you need to make sure you have the correct beneficiary designations on your accounts. I recommend checking all of your accounts once a year. A common problem is that accounts get moved to new bank/brokerages and you have forgotten to do beneficiary designations on the new accounts.

If you do not have a estate plan, you should make it a priority. If you have a Trust and need to have it reviewed, I see people for a free 30 minute consultation in my Walnut Creek and Brentwood offices.

Law Office of Joan Grimes

Law Office of Joan Grimes

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Law Office of Joan Grimes

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