Estate Plan Issue – (Q & A)

Jul 2018


Dear Rick:
I am 60 and a widow. I have been dating someone for the last year or so and we have decided to move in together. The plan is for him to sell his house and to move into mine. We currently have no plans to marry, as I would lose my healthcare insurance if that happens. My kids are very much opposed to this as they think my boyfriend is just a gold digger. I obviously disagree with them. However, I do want to protect myself. My first question deals with my portfolio. If our relationship does not work, is my portfolio at risk? Also, what happens if I pass away before him; does he get a share of my portfolio? He has been very good to me, and I do want to protect him if something does happen to me; however, I don’t want to do anything irrevocable. Currently, the house is in my name. My children want me to do a quit-claim deed to put their names on the house. I would like to know the legal ramifications of doing a quit-claim deed. I do trust my children, but I’m not sure they have my best interests at heart.

Thank you.

Dear D.R.:
The first issue deals with your portfolio. Basically, you are under no obligation whether you’re living together or not, to leave him anything. Even if you pass away while he’s still living in the house, he has no legal right to your portfolio. Of course, if you two eventually get married, he would have certain rights. The cure for that is to do a prenuptial agreement before you get married.

If you choose to leave him something if you should predecease him and at the same time you don’t want to do anything irrevocable, you have two options. The first is you can name him as a beneficiary of your portfolio. If you have an account at places like Fidelity, Schwab or Vanguard, you can name him as a beneficiary. It doesn’t have to be for 100 percent of the account; rather, you can choose to leave him any percent you want. By naming a beneficiary it is 100 percent revocable. You are free to change your beneficiary at any point in time. Therefore, if down the road the relationship sours, all you would have to do is change the beneficiary.

Another option is to do a will or a trust where you can decide how much you want to leave him. Once again, wills and trusts are totally revocable and you can make changes whenever you choose.

As a side note, if you have not had your will and/or trust looked at since you became a widow, it’s probably a good idea to do so. Of course, if you have never done any estate planning documents, no matter what you decide to do with your friend, it is important to have an estate plan and as part of that estate plan you should have a medical power of attorney, so that someone can take charge of your medical affairs if you are unable to.

With regards to the house, if you do a quit-claim deed and add your children to your home, you are basically making them a co-owner of your property. As a co-owner, they would have certain rights to your home during your lifetime. Typically, when you do a quit-claim deed, you’re transferring all or a portion of your ownership to those people. The reason most people do quit-claim deeds is to avoid probate on the property upon death. However, there are other ways of going that will allow you to avoid probate but at the same time, not give up any rights during your lifetime. In the situation at hand, I would probably discourage you from doing a quit-claim deed. My reasoning is that you are having issues with your children about your friend, and if you put their names on your home it could cause you some problems. Therefore, if your reason to add your kids’ names to the property is to avoid probate, but not to currently transfer ownership, I would look at either doing a Lady Bird Deed or a Trust. Both of these documents would allow you to retain control of your property and only giving your kids rights upon your death.

One question I get all the time is whether people should put their children’s name on their property such as their home. Although every case is different, I generally want people to retain 100 percent control of their property for as long as possible. After all, we all know of families who’ve gotten into some nasty fights, and that is certainly something you want to avoid. Therefore, everyone needs to be cautious when they put others, even children, on their property. Avoiding probate is a good goal; however, you can do that without giving up control.

Good luck!


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