Planning for the Smooth Transition of a Decedent’s Home

In the early years of Saturday Night Live, there was a skit called “The Thing That Wouldn’t Leave.”  It dealt with John Belushi playing a dinner guest that refused to leave his hosts’ home.  A very funny sketch, but one that is often re-enacted without the humor in real life by children who reside with their parents but who do not voluntarily leave after their parents have died.

There are many reasons why children live with their parents.  They range from the noble daughter who leaves the work force to provide care for their aging to parent to the son who never grew up.  When a parent dies, there is often a dispute as to the manner in which a child’s continued stay in the home should be addressed in the administration of the parent’s estate.

The Appellate Division of the New Jersey Superior Court dealt with this issue in The Matter Of The Estate Of Clare M. McCrink, Deceased.  In this case, Clare McCrink died in November 2011.  One of her six children, Elaine McCrink, was the executrix under her Will.  Elaine had been residing in Clare’s home prior to Clare’s death.   The Will stated that the estate should pay the carrying costs of the property (i.e. the real estate taxes, homeowner’s insurance and utilities) until the house was sold.  However, Elaine did not list the house for sale until 2013 and that was only after two of her siblings filed a court action which compelled her to do so in May of that year.

In addition to compelling Elaine to list the house for sale, the Court determined that she should pay the carrying costs for the property as of January 1, 2013.  Although the Will did not state a period of time in which the house should be sold, the Court asserted that it should have been sold in a reasonable period of time.  Specifically, it found that Elaine unreasonably delayed her obligation to sell the home and had not taken the steps to sell the property in the aforementioned reasonable period of time.

In this day and age of an ever-aging population and children returning to the parental home, it is imperative that wills and trusts clearly address how to handle the issues which arise from these arrangements.  In doing so, three core issues should be addressed: (1) Should the child be given any economic consideration – either for or against – for residing in the home?  If they are providing care to their parent, should they get an additional inheritance or the home itself?  If they have failed to launch, should their share be reduced?  (2) If the house is to be sold, how long should the child be able to live in the property before listing the home?  (3)  If the child is given a right to live in the home, how much should he or she contribute?  As to this last factor, there are three schools of thought: (a) charge fair market rent – that often seems to be a windfall for the other family members, (b) charge nothing – that seems to inhibit the child from moving and creates a scenario like in McCrink, and (c) assess the carrying costs.  This option is often the fairest.  However, in employing it, there should be consideration as to when such costs should be paid and for how long the arrangement will last.  In all, situations like the McCrink  case are becoming more common.  To avoid litigation and hard feelings within a family, it makes sense to proactively provide for them in proper legal documents.

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