From Our “Ask a Question” Mailbag: Keeping the Family Home in the Family
Most Recently Updated August 10, 2018.
“I am the first homeowner in my family, and I worry that someday my children might need to return home to collect themselves. While I am alive, I will always keep the house ready for them, but I worry about after I die. Can you explain how to keep the family home in the family?”
Keeping the Family Home in the Family; Considerations.
Clients often ask about keeping a home or vacation property in the family for future generations. It might be that the family enjoys a central gathering location. But for many people, a home can also serve as a haven where children can return to regroup and recover after a failed marriage or financial difficulties.
While there are many reasons to keep a home in the family, homes are time-consuming and expensive, requiring attention and repairs. Further, family members have diverse interests. While some see the family home as a safe place, others see it as investment capital better invested elsewhere. Geography also comes into play. The grandchild who moves permanently to California might see little need for a Philadelphia home or a New Jersey shore property.
So, a successful plan must provide a system for property preservation and a method to produce the necessary money for property maintenance. Further, a good plan also offers a well thought out exit strategy should the home cease to serve its intended purpose.
Revocable Trust; Maintaining the Home During Your Lifetime.
The next paragraph will deal with how to protect your home using an irrevocable trust permanently. But to reach that point you need the house to be yours at your death still. We all grow old. We don’t all fully control the last years of our lives nor our ability to handle our assets. Altzheimers’, dementia, strokes; so many afflictions can put the control of our assets in someone else’s hands. Without a plan, your home might be sold before your death, thwarting your plan to keep the house in your family.
Step one is to provide the right person the necessary power to protect you and your overall plan should you fall ill. Protect yourself and your plan with a Power of Attorney. If your goal includes preserving the real estate, a Revocable Trust is another valuable tool. By utilizing these tools, you can empower the person or persons who will rehttps://www.klenklaw.com/practices/estate-planning/power-of-attorney/spect your wishes even if you are no longer able to enforce them yourself.
Dynasty Trust; Protect Your Children and Grandchildren.
If you give your home directly to your children, then the house can be lost in divorce and to creditors. Further, your children likely will leave all their assets to their spouses, who might not respect your wishes. Finally, given a home to more than one person opens the door to one or more of those people using the courts to force a home’s sale.
Instead, you can place the home into an Irrevocable Trust. The trust owns the home, not the children. A house can be sold only if and when the trust terms allow. Further, the house provides shelter from the children’s divorces and creditors.
A Dynasty Trust is a trust that is designed to last for generations. Though you can set them up during your lifetime as an Irrevocable Trust, most people form Dynasty Trusts at death. Most people create a Dynasty Trust through their Will or Revocable Trust. The language establishes an Irrevocable Trust at your death that can hold your home. The trust provides shelter from your children’s divorces and creditors. Further, the trust spells out the rules you wish enforced. Such trusts have been available in New Jersey and Pennsylvania for some time.
For example, your Will can say that your home pours into a Dynasty Trust. The terms could state that your children serve as co-trustees able to decide who lives in the house and what expenses that person must pay. Until your death, this trust doesn’t exist. You are fee during your lifetime to change terms or even sell the house.
Read my website for more information about Dynasty Trusts.
Who Serves as Trustee?
The Trustee is the person or company in charge of the trust. The Trustee enforces the rules. Selecting the trustee is vitally important. The trustee must manage the various beneficiaries’ conflicting goals and maintain the house. The trustee must collect money, pay bills and perhaps evict a child or grandchild who refuses to obey the rules.
Not everyone is suited to serve as trustee. If you had us design your trust, we would advise you to think carefully about your trustee and the various available checks and balances on trustee powers.
Children and grandchildren move. Neighborhoods and tax structures change. It might turn out that far in the future the need for the home just does not exist. If so, it is best to design an exit strategy. Without one, the property might become unsellable and abandoned. What will be the trigger that someday allows your family to sell the property? There are as many ways to answer that question as there are families. If you have us design your trust, we will brainstorm options and arrive at a strategy that best fits your own, personal philosophy.
More Planning Questions?
Keeping the Family Home in the Family is only a piece of the Estate Planning process. By all means, if you want to learn more, please read my more detailed article, Estate Planning Everything You Need to Know.
In Conclusion: Keeping the Family Home in the Family
I hope that this article was helpful in explaining Keeping the Family Home in the Family. Further, I included links to even more detailed information on my website so you can learn more. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!
Let our Estate Planning lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced estate planning lawyers. By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!
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Author, Peter Klenk, Esq.
Throughout our website, klenklaw.com, you may find more information about Estate Planning including How to Keep the Family Home in the Family. Also, our firm focuses exclusively in the area of estate planning, probate, and the litigation surrounding estate planning and probate. This includes Will Contests and Will Challenges. Therefore, if you need assistance with any estate related matter call one of our Experienced Estate Planning Lawyers for a free consultation. We practice throughout New Jersey, Pennsylvania, New York, and Florida.