The living arrangements for many couples these days is not traditional. Many couples live together and choose not to get married, some couples room together for convenience and even those that are married don’t commingle asset ownership. For many of the couples I meet with, regardless of their “marital status” or lack thereof, the one common theme we discuss is ownership of the primary home and who it will pass to at the homeowner’s death.
For many of these couples, the home is not owned jointly. One partner owned it before the relationship or marriage. This may work out just fine as long as the homeowner is living, but what happens if the homeowner becomes incompetent or dies?
Let’s take the issue of the homeowner becoming incompetent. Does the homeowner have a Durable Power of Attorney and, if so, who is named to serve as the “agent”. Is the “partner” who lives in the home authorized to act or does the Durable Power of Attorney nominate an adult child of the homeowner? If so, what if the homeowner needs to move into a care facility and the cost of care is high? Will the power of attorney sell the house to pay for the homeowner’s care? If the home needs to be sold, the “non-owner” partner has no right to continue to live in home. The “non-owner” partner is in essence a month to month tenant and can be given notice to vacate.
Now let’s address what happens when the homeowner dies. Is there a Will or Trust to address what happens to the home or even the partner’s right to stay in the home? Does the homeowner leave the home to the partner or in trust for the partner to live in for a lifetime or even a term or years? If there is no “plan” and the homeowner dies, the home will have to be probated and the home or the proceeds from the sale of the home will go to the homeowner’s next of kin. The partner is NOT next of kin. Once again, the partner may find themselves homeless.
The good news is that all of these possible problems can be solved with the proper estate plan. Failing to plan is planning to fail.