Why should visit an estate planning attorney, to discuss what you want to do with your property when you die

Dear Len & Rosie,

I am married to my second husband but our home is in my name alone. It was purchased and paid for by my first husband and me. We have a small loan of $5,000 against the property. I would like to leave the house equally to my husband and my two daughters by my first marriage. I need either a will or a living trust, but I want whatever will make it simpler for those I leave behind.

Sara

Dear Sara,

Interestingly enough, if you want your home to be divided equally between your husband and your two daughters, you do not even have to have a will. Because the house was your sole property before you married your second husband, it is your separate property, except for whatever small portion of your community property that has gone into paying off the loan you mentioned. Under California’s intestate succession laws, your husband will inherit one-third of your separate property and your children shall divide the rest, if you die without a will.

But you should have at least a will anyway. Simple wills are very inexpensive. Without a will, you cannot appoint an executor to administer your estate and there could be some conflict in your family about who should get the job. Also, if one of your daughter’s dies before you, her share shall pass to her children, if she has any. If a minor grandchild inherits from you upon your death, the grandchild’s share would be held in a guardianship which would terminate at age 18, when the minor would receive his or her share outright. Most 18-year-olds are not responsible enough to manage that sort of money. An estate plan that creates a trust for the benefit of young beneficiaries is vital. Better yet, create a revocable trust to avoid probate in the courts upon your death.

You may also want to reconsider your intention to give your daughters two-thirds of your home immediately after your death. If they and your husband own your home together, any one of them can sue the others and force a sale of the home in an action for partition. Conceivably, your husband could wind up with some cash in his pocket and no place to live.

An alternative to giving everything away outright is a revocable trust, or a testamentary “house trust” written into your will. A trust can hold your home for the benefit of your husband for the rest of his life. After your husband dies, the trust can then give everything to your two daughters. This way, your children will ultimately get all of your property, instead of just two-thirds, and your husband will be assured of a place to live out his days.

You should visit an estate planning attorney, to discuss what you want to do with your property when you die. Even when people have simple desires such as your own, complications that they are unaware of can ruin their plans. An attorney can let you know of the things that can go wrong and help you create an estate plan which will do what you want.

Len & Rosie

What to do with a Drug Addicted Beneficiary's Inheritance

Dear Len & Rosie,

Unfortunately, one of my two children is a victim of the opioid epidemic. He is a heroin addict who lives on the streets of San Francisco. I often don’t hear from him for months at a time and don’t know if he is dead or alive.

If he were to inherit a large sum of money (at this point in time his half would be $500,000, he would lose it or spend it all on drugs until it was gone or he was dead. I would rather throw the money out the window than have him inherit his portion in the current situation.

Can I structure his inheritance such that he would get money only if he were able to show a history of sobriety? How would this be done? Could I structure it so he would inherit only a certain amount each year while continuing to prove sobriety?

Tom,

Dear Tom,

We are glad that you wrote us because we have experienced trust administrations in which the parents neglected to take into account substance abuse and mental health issues with their children. There are lessons to be learned here that your family doesn’t have to learn the hard way after your death.

It is important to acknowledge that your son suffers an illness and should be treated with compassion whenever possible. But it’s equally important to look at his situation with eyes wide open. Your opioid addicted son should never be named as a trustee of your trust. Nor should he be named as an executor or agent under a power of attorney or health care directive. Under no circumstances should you give him any ability to access your funds. Even giving him your ATM pin number is too risky.

As for leaving him an inheritance, you have several options. The first is to leave him nothing at all, and instead leave it all to your other child with the understanding that he or she will chip in to help your son whenever appropriate. However, this plan may not work. It could be the case that your children are so set against one another that leaving it all to one means the other will never get anything.

A better although more completed alternative would be to leave your addicted son’s share in a trust for his benefit, with your child as trustee. You can give the trustee the power to appoint a replacement trustee, in case it’s too difficult to deal with an addicted beneficiary who wants money.

The trust can also allow the trustee to withhold payments if your son fails a drug screening test. Your other idea is fairly good. The trust could say your son gets, say, $2,000 a month, or any other amount you prefer, if he passes his drug screen. This would make it easier for the trustee, as your trustee wouldn’t have the discretion to give him more money beyond what is allowed for in the trust.

You should see an attorney soon to create an estate plan to take your son’s addiction into account.


Len & Rosie