Dear Quentin,
My widowed mother decided to remarry, and she chose a lovely man whose family has a history of remarkable longevity. They signed a prenup giving each of them the right to live in the marital home after the other passes.
Over time, they became snowbirds, splitting their time between two homes: a summer home owned by my mother and a winter condo owned by my stepfather. I should note that no one in this story is particularly wealthy — these are ordinary retired people who downsized from “family” homes.
My question is twofold. First, when one of them dies, who determines which property is considered the “marital home,” since they currently live in both? Could this new husband choose to live in my mother’s summer house for the rest of his life?
Second, if she outlives him, I assume his children might resent her? This arrangement could tie up a sizable portion of their inheritance. In such a case, which document governs — the prenup, which grants housing to the surviving spouse, or the will, which leaves the real estate to the children?
Who is legally responsible for property taxes, maintenance, insurance and homeowners association fees for a property that the person living in it does not own? I am curious about how the bills get paid when someone has the right to live in a property but does not actually own it.
The Devil in the Details
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Dear Details,
He’s a lovely guy? That has already resolved 99% of the problem.
Usually, people write letters about scoundrels, scammers, wenches, thieves, abusers, bullies, liars, kidnappers and even murderers. The fact that your mother and stepfather have, I assume, similar qualities of loyalty and respect for each other goes a long way. As you point out, however, they also require legal counsel and excellent organizational skills to make sure they’re not leaving any loose ends. His kids might not be happy about the life estate, if he dies first, but that would be their problem.
Once properly notarized, signed and recorded in the appropriate land records office, a life estate cannot be undone, especially by stepchildren. It is a legal deed that should reference a particular property so there is no doubt about where either your mother or her husband may live in the event that one predeceases the other. If they go back and forth between two houses and merely cited a “marital home” in the documents, that would create confusion. But unless they found their attorney at a county fair, I’m sure they’ve got this part in hand.
As for resentment among stepchildren: They, or you, will have to wait for the inheritance for as long as one person has a life estate — I suspect both homes are included in the life estate, but your mother will be best able to answer that — and, yes, that can create tension. And not to sound macabre, but it also sets up a “waiting game” for the widow or widower to die. There’s no accounting for people’s behavior or feelings, and it’s best to leave difficult folks to their own devices.
Generally, a life estate trumps a prenuptial agreement, and a prenup trumps a will.
Regarding your question about which legal document comes out on top: Generally, in the event that there are any contradictions or confusing wording in your mother and stepfather’s estate plan, a life estate trumps a prenuptial agreement, and a prenup, which is signed by both parties, trumps a will. There may be exceptions, depending on the state or the case, and on whether the document has been properly authorized and clearly written.
A life estate is created through a deed, not through a prenup or will. The life tenant retains the right to use and occupy the property for their lifetime. The life-estate deed bypasses probate entirely. A will cannot override a previously recorded life estate, since the decedent no longer holds full ownership of the property at the time of death. The life tenant should maintain the property and pay taxes, insurance, etc. The responsibility for any structural upgrades should be specified in the deed.
A prenuptial agreement, on the other hand, is a binding contract between your mom and stepfather that outlines their property rights and financial arrangements.It often devotes as much time to waiving inheritance rights and default spousal elective-share laws as it does to covering assets that will be inherited in the event they divorce or one predeceases the other. As this is a contract between two people, it generally overrides a will.
A will cannot override a life estate, a prenuptial agreement or named beneficiaries.
Finally, a will controls the assets a person owns at death that have not already been transferred by deed, trust or contract or via beneficiary designation. It cannot override a life estate, a valid prenuptial agreement or named beneficiaries. State law and whether the will has been properly executed also affect its potential enforceability. A will helps streamline probate, while those who die without one leave the distribution of their assets up to the laws of their state.
If the right to live in the home in question did originate from a prenuptial agreement rather than a life-estate deed, the wording of the prenup would be critical. If the surviving spouse is living in the home but doesn’t actually own it, the life-estate deed or prenup needs to clearly reflect who owns the property. If it doesn’t do that, your mother or stepfather could end up with serious gaps in their insurance coverage if there’s ever a claim. So make sure they are named on the insurance too.
If either spouse needs long-term care, having the right to remain in a home can complicate Medicaid eligibility. A life estate or contractual right to occupy the property may affect whether the home is counted as an available asset and how it is treated financially. For example, assuming that a life estate is properly structured, the children who are set to inherit the property generally cannot force a sale while the life tenant is still living there.
Hopefully, theirs will be a happy marriage. Long may these snowbirds fly.
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