'I am beyond hurt': If my husband and his son die, his house will go to his daughter-in-law. Is this nuts?

By Quentin Fottrell

"His son, who is a high earner, will need to wait for his inheritance until after I pass away."

Dear Quentin,

My husband, 75, and I, 67, married late. It's the second time for both of us. I do all the household chores, including gardening, decorating and housework, but we pay equal amounts into a joint account. We have kept our separate assets from before we met.

He has two adult offspring, and he is estranged from one, so one of his children will inherit his entire estate. I have two children who will inherit equally, and made the usual arrangement - if either child dies before me, their share will be trusted for the grandchildren.

When my husband was asked the same question, as his son has no children, the lawyer suggested in the event the son predeceased my husband, his share would revert to me. My husband was vehement that it should go to his son's widow.

No financial provision

Therefore, my husband has made no financial provision for me other than to live in the house until my death. It's an old house and will eventually require a new roof and heating system. It was originally his, but I've also invested in 10% of its value.

I would need to find the funds to do this, and my stepson (or, indeed, his widow) would benefit from the increased value. My husband told his son, who is a high earner, that he will need to wait for his father's house until after I pass away.

I am beyond hurt, but my husband cannot see my point of view, and says I'm just jealous of his daughter-in-law. Is this an unfair arrangement? It would cost me thousands of dollars for the upkeep of this property. Is this nuts? How should I proceed?

The Second Wife

Related: I give my mother's ailing next-door neighbor $500 a month. She agreed to sell me her house, although she'll continue to live there. Is this a good plan?

Dear Second Wife,

There's nothing like an estate plan to establish a pecking order.

Unfortunately, his son comes first, his daughter-in-law comes second and you come third when it comes to who ultimately inherits the house. It's hard to know whether that's merely a show of affection for his son's wife, plus a reflection that she is his son's next of kin.

His comment about you being jealous was cruel and unusual, and reflects more on him than it does on you. It's hard not to take such comments personally, but I urge you to put that aside for now and focus on the upside of this arrangement, assuming you have a happy marriage.

Now, the good news: In terms of your husband's life estate, and the use of the property for your lifetime, you come first, and his son and wife second and third, respectively. That's something to hold onto. He's taken care of you, whether or not you are happy with all the details.

You are also at odds with each other over circumstances that have yet to happen and, based on your husband's and his son's life expectancies, it's unlikely to happen anytime soon. Why argue over such a hypothetical scenario when it does not impact the life estate he bequeathed to you?

Property division varies by state. If your husband died intestate in Texas, as well inheriting all of your community property, you'd get one-third of his separate personal property, plus the right to live in your shared primary home and use one-third of his remaining real estate for life.

It would be a little simpler if your husband died intestate - without a will - in California, given that he has two living children. In that case, you would once again inherit all of your community property and one-third of his separate property, while his kids would get the other two-thirds.

Expectation vs. obligation

This life estate is a gift horse. Your husband is under no obligation to leave you any part of his separate property. You may have the expectation that he should do so, but I can understand why he would want his son to inherit the family home. Objectively, it's a generous offer.

He clearly wants to keep his family home for his children. It could be that it was where they grew up and he believes it's up to his son to decide whether to live there or sell it. Given that he is estranged from his other son, he could view his daughter-in-law as a de facto second child.

Unless otherwise stated: Upkeep and maintenance of the life estate is the price you pay for living in this home - without having to worry about eviction, mortgage payments or a landlord raising the rent - for the rest of your life. This is something you can discuss with your husband.

There are other protections afforded to you with this arrangement. "Retaining a life estate also allows you to protect your home from MassHealth or Medicaid liens in the event that you need long-term care," according to the law firm Puglini & Norton, which has offices in Massachusetts.

"Ordinarily when an individual receives Medicaid benefits, the commonwealth places a lien against the home so that the state can recover these benefits when the recipient dies, or the home is sold," it says.

However, you would have a big loophole if you found yourself in such a situation: "If the recipient has created a life estate more than five years before applying for Medicaid, the lien will be extinguished upon his or her death" the law firm adds.

It's a net positive. You had a win - and you had a loss. Take the win.

The Moneyist regrets he cannot respond to letters individually.

More columns from Quentin Fottrell:

'He always managed to play golf': My husband of 14 years never worked and now we're divorcing. He wants half of my $1 million home. What can I do?

'I'm appalled': My grandfather co-signed my cousin's student loan. After my grandfather died, my cousin skipped town. Will the estate have to pay the debt?

'In a worst-case scenario, we fear a stock-market bust': We are 'healthy boomers' in our 60s with a net worth of $4.2 million. Is it time to diversify?

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-Quentin Fottrell

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09-28-24 0722ET

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