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Dear Quentin,
I live in Pennsylvania. Four years ago, my father-in-law died, leaving a trust for my wife and her two sisters. They each received a vacation home in a trust under will. My wife and I rent our home out, and the income is used toward paying for our current home and expenses. We up-sized after receiving the trust rental.
My wife has no will, and has not named me as her successor trustee in the event of her death. Neither of us has children. The income has been used jointly since receipt of the trust property. The funds go into a joint account, and I handle all the financial transactions on our home and the rental property.
She says everything will go to me, as we’ve been married for 30 years. Although there have never been issues with her sisters, I am concerned that if something happened, her sisters might try to claim it as family property and say I’m not entitled to it. I would need that continued income to maintain my current residence, as there is no life insurance or substantial savings.
Am I concerned for no reason, or should I be trying to convince her of the need for a will again?
Paranoid in PA
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com
Dear Paranoid,
Most things are good in moderation, even paranoia.
You are correct that, if your wife owns the home outright, it would be considered marital property under the law. You are your wife’s direct heir and, given that you have no children, you would inherit her entire estate. Of course, what happens to any funds in the trust would depend on the terms of that trust. From what you say, the income from your rental home appears to be safe.
But…
It’s always recommended to have a will, even if you have no children, and especially if you are dealing with matters involving inheritances and trusts. Avoiding probate is one way of keeping your affairs private. You also want to consider setting up a financial power of attorney and a medical directive, should one of you become incapacitated and unable to handle your own affairs.
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‘Avoiding probate is one way of keeping your affairs private.’
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“Couples without children that can serve as an alternate agent should consider appointing others that they have an established relationship with that are trustworthy and have the experience and capability of handling the responsibilities of being an agent under a financial power of attorney and/or a medical directive,” according to the law firm McNamee Hosea.
“Furthermore, as part of their estate plan, they should consider maximizing their bequests by minimizing the income tax implications of retirement benefits,” the law firm adds. “For example, to the extent they have charitable intentions, they could designate a charity as a beneficiary of part or all of a retirement account and give other nontaxable assets to other beneficiaries.”
As you can see, there are so many other reasons to commit your intentions to paper. If you have a complicated estate, probate can be held up for months or even longer, especially if there are people who decide they are entitled to a slice of the pie. There is no accounting for peace of mind — and, it seems, a second conversation with your wife would help give you that.
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