There are numerous ways to accomplish distributing property, according to specific wishes. A woman with three grown daughters faced a problem about passing down the family home. She wanted to give it to the youngest daughter, who has taken care of and is closest to her. However, she also wanted to be sure that, if something happened to this daughter, the house would go to her two other daughters and not the close daughter’s adult children. Limiting beneficiaries is entirely up to you.
With proper planning, this can be done, as described in the article “Mom needs contingency plan to pass house title” from mySanAntonio.
One way is to rely on a last will and testament. The will would state that she leaves the house to the youngest daughter, under terms of a testamentary trust inside the will. The daughter is permitted to use, enjoy, and live in the house during her lifetime, as the beneficiary of the testamentary trust.
The two older daughters would be named as the secondary beneficiaries of the trust. When the younger daughter dies, the trust distributes the house to the older daughters.
The plan will need to be prepared by a qualified estate planning attorney and it will likely be probated. This process is slow and can be costly, even if the will is professionally written, properly signed by the mother and two witnesses, includes an executor and a trustee and clear instructions about her wishes. An estate planning attorney can prepare it correctly.
If the goal of limiting beneficiaries also includes avoiding probate, there are other options. One is an enhanced life estate deed, and another is a living trust. The enhanced life estate deed specifies that the woman is retaining a life estate, that is, the right to use, enjoy and occupy her home, for the rest of her life. The document specifies that when she dies, the home goes to her youngest daughter. The owner would also want to specify that she has the right to change her mind at any time.
This approach avoids probate. However, there is a downside. If the youngest daughter dies before the mother, then the mother will need to take legal action to cancel the deed and issue a new one to the two older daughters. If the daughter outlives her mother, once she inherits the house, there will be no way to have it transferred to the other sisters in the future (unless the daughter choses to do so).
A living trust provides the detailed control allowed in a will, but the trust, which must be properly created and funded, avoids going to probate. The trust would let the mother live in the home, and when she dies, the title to the house stays in trust with her youngest daughter, who is able to live in the house. However, she never becomes the owner of the house. The trust would continue to own the house. The trust would specify that when the daughter dies, the house goes to the two older daughters. To be extra safe, it should also specify what she would want to happen, if one or both of the older daughters dies.
None of these is simple, but they are all feasible. Speak with an experienced Naperville estate planning attorney about effectively limiting beneficiaries.
Reference: mySanAntonio (June 8, 2020) “Mom needs contingency plan to pass house title”
