Without a doubt, the number one question I get from clients is, “Can’t I just give away my house to my kids?” At this point, I start to worry if clients don’t ask this question. Everyone thinks they can trust their kids and that their kids will get along fine after they are no longer around. I usually answer the question by telling two real life stories that ends this line of discussion.
First, I tell them about a former client who has since passed away and decided to give her house to her son and daughter. The client went to a solo practitioner and the lawyer prepared what is called a life estate deed. Basically, the client gave away the right to own the house after she died to her two children. Unfortunately, her son died before she did. Then, because technically the client’s kids owned a right to the house even though their mom was still alive, the daughter-in-law sued the client and the client’s son to compel a sale of the home through a process called partition. Keep in mind, this is while the client is still alive and residing in her own home!
Second, I trot out the story of the mom who gave her house to her daughter when they were living together. The mom thought she was doing a good thing and followed some advice she received from her friend. Well, because of a fight the mom and daughter got into, the daughter evicted her mother from the house. She then proceeded to sue her mom to keep her off the premises!
These examples are extreme, but they are both real cases that came to me after the fact to try to preserve some of the assets the parents had left. It may seem unbelievable that these stories could even be allowed to occur in real life, they almost seem like something out of a television show. The lesson is that what seems the simplest path, especially in planning your affairs, may end up much more complex in the long run. This is why we recommend the Family Protection Trust for clients in this situation and with a desire to preserve the family home and maintain control over that asset for as long as possible.