estate planning

Don't Give Away Your Home to Your New Love

Protect your home and protect your children.

Recently, we've had several clients with the same problem:

  • They are widowed or divorced,
  • They own their home,
  • They have a new spouse, partner, boyfriend or girlfriend, and
  • They want to add their new spouse or significant other as a co-owner of their home. 

Our initial advice is usually - DON'T DO IT!

Why do we recommend against adding a new spouse, partner, boyfriend, or girlfriend to the title of their home?

This is what we discuss with our clients:

  1. What will happen to your home if you get divorced or break up? Will he or she have an interest in it? Will you be forced to sell it? 

  2. What happens if he or she dies before you? If you add him or her to the title as a tenant in common, his or her heirs or beneficiaries will get an ownership share of your home when he or she dies. 

    If you add him or her to the title as a joint tenant with right of survivorship, that might be okay if he or she dies first and you become the 100% owner. However, with joint tenancy, if you die first, he or she becomes the 100% owner.

  3. Would you rather your children receive your home when you pass away? After all, you have been with your children their entire lives. How long have you known your new spouse, boyfriend, or girlfriend?

    DISCLAIMER. My bias tends to favor my client's children over their new love. Your children will always be your children. Your new love may be here today and gone tomorrow. You don't want your home to be here today and gone tomorrow.

  4. If you add a non-spouse as a tenant in common owner of your home, your property tax will increase. Adding a tenant in common will be considered a change in ownership, and the county assessor will reassess the transferred interest and increase your property tax based on the assessed value of the transferred interest.

Ok, Clark. I get it. I won't add my new spouse or significant other to the title of my home. But I'd like him or her to be able to stay in my home if I die first. Is there a way I can provide for that in my living trust? Yes, there is.

Create a Residence Trust within Your Living Trust

Our solution is to include a Residence Trust in your living trust. A Residence Trust is a sub-trust of your living trust. Your living trust will include instructions for your trustee to transfer your home and a predetermined amount of cash to a new trust following your death. This new trust, the Residence Trust, which is an irrevocable trust, will provide the terms for your new spouse or significant other to live in your home. The terms of the Residence Trust will include Ocuppancy, Expenses, and Sale.


  • Short-term. You may want your new spouse or significant other to live in your home rent-free for a certain amount of time to give him or her a reasonable time to find a new home. Typically, such a term is six months to one year.

  • Long Term. You may want your new spouse or significant other to be able to live in your home rent-free until he or she chooses to move out or until he or she passes away.


Who pays the expenses of your home while your new spouse or significant other is living in it? We typically divide the expenses into two categories: owner expenses and tenant expenses.

  • Owner Expenses. Owner expenses can include mortgage, property tax, homeowner's association dues, homeowner's insurance, and repairs and maintenance costs.

  • Tenant Expenses. Tenant expenses can include utilities, internet, cable, trash, and water.

In order for your trustee to pay the owner expenses, you must include a provision in your living trust to fund the Residence Trust with cash - more than enough to cover these expenses for the occupancy term.


What happens to your home at the end of the occupancy term? Often, our clients want their trustee to sell their home and distribute the sale proceeds among their living trust beneficiaries, which are typically their children. Sometimes, if their new spouse or significant other has been with them for a long time, they want to include them as beneficiaries of the sale proceeds.

Property Tax, Homeowner's Insurance, and Mortgage

If you intend to use a Residence Trust, you need to be aware of potential issues with property tax, homeowner's insurance, and your mortgage.

  • Property Tax. If your spouse is the occupant of your Residence Trust, then the property tax on your home will not increase. However, if the occupant is a non-spouse, the county assessor will request a copy of your living trust and determine that your significant other is the current beneficiary of your Residence Trust. And then, the assessor will reassess your home and increase the property tax. 

  • Homeowner's Insurance. As you are most likely aware, at the moment, many homeowner insurance companies are pulling out of our great state of California. It's already difficult to secure homeowner's insurance. It may be a bit more difficult to insure a home owned by an irrevocable trust.

  • Mortgage. If your home has a mortgage when the Residence Trust is created, there are some considerations. If you have enough liquidity in your estate, you may want to include a provision in your living trust to have your trustee use your funds to pay off the mortgage. If you have the means to do this, it would certainly simplify the administration of the Residence Trust. Life insurance could be a good resource to pay off the mortgage.

    If the mortgage remains, you need to be aware that standard residential lenders don't like irrevocable trusts, and when your lender learns you have passed away, it may require a refinance with higher rates for an irrevocable trust.

Final Thoughts

If you have significant assets in addition to your home and have been with your new spouse or significant other for a long time, you may want to consider writing your living trust so it instructs your trustee to give your home to your new spouse or significant other outright, with no strings attached. Then, give your other significant assets to your children. If this allocation meets your planning objectives, you won't need a Residence Trust.

But whatever you do, make sure your estate planning attorney includes a provision in your living trust that states the gift of your home or creation of the Residence Trust for your new spouse or significant other is null and void if you divorce your new spouse or break up with your significant other.

Don't give away your home when you don't need to.

Contact us for more info

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