Orange County Estate Planning Lawyer Blog
Letting Some of the Kids Live in Mom’s House May Lead to Costly Litigation
Frequently we run across situations where parents will leave their residences to one or more of their children in their will or their trust. If they only have one child then the situation is usually okay but when there are multiple children and some are living in the house and some are not there can be problems. Allowing some children to live in Mom’s house messes up the other sibling’s inheritance.
The Back Story
We were recently able to successfully solve a situation like this that had gone to court. The mom had died and left her house in a trust to her three adult children but it turned out that one of her adult children and his family resided in the house for many years. However the trust involved was not properly drawn up and only the adult child residing in the house had a copy of it. Then the adult child residing in the house met an untimely death and the other two adult children wanted to have the house sold. The three adult children had an informal arrangement among themselves as to who is going to pay the various household expenses, taxes, repairs and insurance. However, there were numerous accounting issues and arguments about who owed what to whom and the surviving spouse of the adult child who died filed a lawsuit with her version of what her husband was owed from the others.
The Surviving Spouse Had Listed The Home to Be Sold
Meanwhile, prior to the filing of a lawsuit, the surviving spouse had signed a real estate listing agreement with a licensed broker to sell the house. The broker found a qualified buyer and wanted to close on the house sale. However, the title of the house was tied up with a notice of pending action because of the lawsuit filed by the surviving spouse. If the house sale did not close, all three of the adult children would have been liable for brokerage commissions, attorneys fees and further damages.
We stepped in and after several weeks of negotiations back and forth, we were able to have all three adult children sign a settlement agreement lifting the notice of pending action and allowing the house to be sold and then ultimately figured out how the house sale proceeds were to be divided up.
Trust & Probate Attorney, Certified Public Accountant & Real Estate Broker
We had to use our knowledge of real estate escrows and accounting to be able to piece the situation together. Had we not been able to effect a settlement, the entire property may have been lost to foreclosure because by the time a buyer had been found, the family of the deceased adult child had run out of money and was unable to make the mortgage payment. And all parties would have suffered enormous amounts of legal fees.
Lessons To Be Learned from this VERY COMMON Story
Among the lessons to be learned from this type of situation is that any trust allowing people to reside in a family residence needs to have specific rules, a proper lease, and a plan as to whether the house would be sold and who is to pay what. These things cannot be left to chance because particularly and family situations the person residing in the house has a hard time understanding the concept of paying rent to the trust which owns the house. Also, often the person who is left living in the house was the one who took care of the parents in their last days and feel at some level that they have a right to remain in the house as payment even if there is nothing like that in writing.
Parents Need to Think Carefully and Fairly about Their Decisions
We have handled other situations involving people leaving houses to their boyfriends or girlfriends and having their children wait to inherit. Attorneys that draft these sorts of trust documents allowing people to live properties need to think (first) as real estate attorneys, (second) as trust attorneys, and (third) as Certified Public Accountant and Tax Attorney so that the entire arrangement is structured very businesslike. Another factor is that it is extremely hurtful to children when their parents leave a valuable asset such as a house to one child to occupy for a long period of time and don’t make other compensating provisions for the other child(ren) not occupying the house. In situations where there are significant, valuable assets, we always recommend that there be some distribution to adult children upon the death of the first spouse so that the children don’t get upset about not receiving anything.
Have You Been “Cut Out” or Marginalized?
That is EXACTLY why I decided to share some of these real life stories. If you have been pushed aside from an expected inheritance, or another sibling seemed to get all the benefits of your parents’ property and assets for years and years, you are not alone. Happens all the time. Often, the current circumstance is a result of never pondering the future; the situation was never thoroughly “thought-through” prior to a parent’s death what the real life results might look like years later. Sometimes one or more siblings are unfairly treated by accident or circumstance that then snowballed on and on. Sometimes it is by intentional scheming or by the undue influence of one child who was “taking care” of a parent in their last years because they were living in the home, lived closer, were not married and busy with raising a family at that snapshot in time. Sometimes the unfairness was engineered by outright fraud or greed.
If this is similar to your circumstance, there may be a legitimate way to get this situation rectified. The sooner you seek experienced legal help, the sooner there will be the opportunity for a viable solution. I offer a free introductory meeting where you can air out your situation in complete privacy and learn of your various options and likely possible outcomes.
Free Introductory Meeting
I encourage you to reach out to make that free introductory meeting with me by calling (949) 851-1771. We can sit down in the strictest of privacy and explore what is going on in your case. I will share with you my honest assessment of your case and suggest what options you might have. There is absolutely no pressure whatsoever. I am pleased to offer this complementary legal service to residents of Orange County and beyond.
If it is late at night or inconvenient to call me, please fill out my online case evaluation form. This form comes directly to my desk. I will contact you the minute I see it.
Conveniently located in Newport Beach near the John Wayne Airport
We are located near the Orange County California John Wayne Airport. My office is catty-corner from Fletcher-Jones Motorcars; —right behind the rear entrance of Newport Lexus on Dove Street. Here is a picture of my office building and a Google Map to get your bearings.
