Staying Protected: Sunscreen, Condoms, and a Will
My partner, “Bruce,” and I have made the leap into domestic bliss—I am moving into his place in Delaware. Bruce has kids from when he was married, one of whom is a pothead. Bruce and I agreed that I’ll pay half the mortgage. What happens if Bruce dies without a Will? Do I get anything for my payments on Bruce’s mortgage?
Welcome to Delaware! You certainly raised a few important issues: basic estate planning needs; handling real estate and shared property; how to deal with inheritance and a child who perhaps should not receive benefits outright. Let’s address some of the basics.
What happens when a person dies without a Will?
Unlike married couples, in Delaware, you and Bruce are legal strangers to one another. If Bruce would like to leave his house to you, or let you live in the house for your lifetime, but dies without a Will (this is called dying “intestate”), the disposition of his property will be decided by statute. In Delaware (and in most states) when an unmarried person dies without a valid Will, his or her property first goes to his or her children or their children in equal shares (even if a child has addiction problems). If no children or grandchildren survive Bruce, then his property passes to his parents. If there are no living parents, then property passes to siblings, their kids, then uncles, aunts, cousins, etc., etc. A partner is nowhere in the picture. Relatives who are complete strangers could be entitled to Bruce’s estate. In the legal world, they call these beneficiaries the “laughing heirs.”
As for the house and the mortgage payments, you could protect your interest in a variety of ways. In your current situation, you might have some right to use the house through landlord tenant law, but ultimately pothead boy and Bruce’s other kids would have every legal right to kick you out of the house. If you want something for your mortgage payments, you’ll need an enforceable written agreement. There are other options like re-titling the property, becoming a joint debtor on the mortgage, or buying a share of the house. However, some options can cause expenses relating to refinancing the mortgage, realty transfer tax, and gift tax that you and Bruce would need to consider. There could also be potential adverse consequences and complications if the relationship dissolves. Also, there are other ways that Bruce can provide for you regarding the house. For example, you and Bruce could have a contract where Bruce puts the house in a trust for your lifetime use or gives the house to you outright.
What documents should we have?
Everyone (regardless of net worth) should have three basic documents: a Will, an Advance Health-Care Directive, and a Durable Power of Attorney. Partners can also consider revocable trust agreements, partnership agreements, property ownership agreements, or other documents that legalize their property arrangements, depending on their circumstances and objectives.
But basic documents are basic. A basic Will only distributes property titled exclusively in the name of the individual who signed the Will. This property is the “probate estate.” A basic Will does not control property titled as joint tenants with a right of survivorship with any other person, even though such property may be subject to state and/or federal estate or other death taxes. It also does not control the direct distribution of life insurance, annuities, IRAs, employee benefits, payable-on-death accounts, and other property controlled by beneficiary forms. Advance Health-Care Directives allow partners to make health-care decisions for one another when one becomes incapacitated. Finally, a Durable Power of Attorney allows a partner to pay bills, access accounts, IRAs, benefits, and attend to life’s business for his or her partner.
Any reason not to use a Will off the Internet?
Not surprisingly, I believe that it is extremely important to choose an attorney who specifically practices in the area of estate planning. Often it is not worth the time, expense, and heartache to use downloadable or “canned” estate planning programs. Cynics will tell you to go ahead and use such forms—when you die attorneys will make more money from untangling the mess these documents can create, than if you paid for proper planning in the first place. And if a Will is not properly executed, it is not considered legal and will be completely worthless. Even some lawyers can only provide basic documents that will “cover your ass-ets.” But not all will take the time to ask the right questions, especially those unique to our community, or our specific needs.
It’s no wonder you’re “wondering.” Don’t wonder any more. Do formalize your plans in advance, so that you and Bruce won’t lose out on what you build together!
Renna Van Oot, Esquire practices at the Old Capital Law Firm in New Castle, Delaware. www.oldcapitallaw.com.
This column is distributed with the understanding that the author, Old Capital Law Firm, and publisher are not rendering legal, accounting, or other professional advice or opinions on specific facts or matters, and accordingly, assume no liability whatsoever in connection with its use.