Relinquishing Co-Ownership of a Home

August 4, 2010 9:32 AM

What complications are likely to ensue if one co-owner voluntarily relinquishes her share to a family home without receiving any payment or other compensation? Would there, for example, be any kind of tax obligation that could result. This concerns my second wife, who was added as co-owner after we were married. After I die and after she either she leaves the house or dies, we want the property to revert to my children by my first marriage. I fear her co-ownership of the property could complicate this. FWIW, I don’t plan to make any decisions based on input I receive from your responses. But before talking to a lawyer, I want to become familiar with the ins and outs of the situation.
posted by NinaLee to Law & Government (9 answers total)

IIRC, generally, if she is the co-owner and you are married, when you die, she is then the sole owner. Therefore, the property would possibly go to her heirs when she dies, and she would have the power to will it to whomever she wants. There are ways to set it up so each of you has a half-interest in the property, and you can will your half-interest to someone else, however, if you are married, this may not be possible in many places. IANAL, don't know how it works where you are, talk to your lawyer, etc.
posted by elpea at 9:39 AM on August 4, 2010

You need to draw up a will which states that your real property held by you and your present wife goes to your children from your first marriage.

Of course your estate Kay have to liquidate the property in order to pay estate taxes, depending on the size of your estate and what the laws look like when you and your wife have died.

This assumes that you live in the US.
posted by dfriedman at 9:45 AM on August 4, 2010

Ask your lawyer if a life estate for your wife with your children having remainder interests is appropriate.
posted by Pax at 9:53 AM on August 4, 2010 [1 favorite]

You can do almost anything you want with a will aside from disinheriting spouses. As it doesn't look like you're trying to do this, your lawyer shouldn't have any problem with this.

Nit picky note: reversion is what happens when someone who has an interest in property that falls short of fee simple loses that interest in favor of someone else. If your wife truly owns the house upon your death, then getting it to pass to your children in such a way that she could not prevent it will be difficult.

The easiest way to do this would have been to keep ownership of the house yourself but give her a life estate upon the event of your death with reversion to your children. Now that she already owns it with you, you're going to need to talk to your lawyer about how to handle that. As it is, she has an equal interest in the disposition of the property after your deaths.
posted by valkyryn at 10:21 AM on August 4, 2010

You can say whatever you want in your will, but it will not apply to her share, and after you die she can change her will to whatever she wants. So if you want to ensure without question that both shares end up in the hands of your children, you're going to need a trust. And she will need to agree with the process, since she has an absolute ownership interest. IANAL, but trust me, you need a trust. One that is irrevocable. That's the only way to make arrangements that survive your own death.
posted by beagle at 10:38 AM on August 4, 2010

Also ask about using a trust to accomplish this.
posted by lockestockbarrel at 12:08 PM on August 4, 2010

Response by poster: I am grateful and appreciate the trouble people have taken to help me on this. But I would think that, if the house were totally in my name, I could leave it to whomever I wanted. And to provide for my wife's use of the house after I'm gone, I could simply include a proviso in the will giving her right to live in it for as long as she wants. As it stands now, she'll probably return to her country of origin after I die and won't need the house. By the way, we're in Virginia. I should have included that earlier. But it's the process of transferring the the full ownership of the house to myself that I would like to learn about.
posted by NinaLee at 1:11 PM on August 4, 2010

NinaLee: "But I would think that, if the house were totally in my name, I could leave it to whomever I wanted"

This is not necessarily the case. Many states have what are called "elective share" statutes. The spouse can "elect" to take a share of the decedent's probate estate under the statute, rather than taking by will. It may not matter that the house is in your name only. If it becomes part of your probate estate, your spouse can elect against your will and take a share of the house. The whole purpose of elective share statutes is to prevent you from "leaving it to whomever you want."

This is all highly variable by state, so (as always) don't take anything you read here as the gospel truth. Your attorney can fill you in on the applicable details.
posted by lex mercatoria at 2:37 PM on August 4, 2010

How old are the kids? As long as you're looking into transferring ownership anyway (from both of you to just yourself), you might want to look at just putting it directly into the kids' names right now. If that's not practical, I think you're going to need a trust, as noted.
posted by beagle at 5:20 PM on August 4, 2010