Bob and Suzy get divorced. Suzy has an adult child, Annie, from a prior relationship. As part of the marital settlement agreement, Bob is supposed to sign a deed conveying his interest in their homestead to Suzy. Suzy is supposed to get a new home loan in her individual name.
Time passes. Bob never signed a deed and Suzy never got a new loan. Suzy dies. As a result of the divorce, Bob owns a one-half (1/2) interest in the house and he is also responsible for the repayment of the loan. This was not the intent of either Suzy or Bob. With proper follow through and estate planning after their divorce, this situation could have been avoided.
What if Suzy was behind on her loan payments? This deficiency could be reported on Bob’s credit as his name is still on the loan. Who now owns Suzy’s one-half (1/2) interest in the home? In this case, Suzy’s heirs because she died without a will. As a result, a probate will also be required in order to properly transfer Suzy’s interest to Annie. What if Annie does not want to own the house with Bob? Like it or not, she does. These are only a few of the questions and issues that might be raised with this family scenario.
Proper estate planning could have avoided this situation. If you are divorced, you should review your family situation, your assets and your estate plan regularly with a qualified attorney, to make sure your wishes will be carried out properly.
About the Author: Peggy Hoyt Peggy R. Hoyt practices in the areas of family wealth and legacy counselling, including trust and estate planning and administration, elder law, small business creation, succession and exit planning, real estate transactions and animal law.