So, you have remarried. Perhaps it has been 30 months; maybe 30 years. When you got together the guy/girl moved into your crib. It’s always been titled in your name and it’s the house you got in your divorce from No. 1. Now you are 60, 65, 70 or whatever and you find yourself in and around conversations about “the plan.” The one where someone dies. You have kids; he has kids. They have needs and the two of you (hopefully) have accumulated some wealth during your lifetimes.

The house. Your house, is worth about $600,000. There’s a small mortgage on it of $100,000 and your school and local taxes nick you for about $800 a month. The mortgage itself if $1,400 but most of that monthly payment goes to principal. Your sister in Boise just died at 72 and your kids are asking: “Mom, what becomes of the house we grew up in if you die?”

That’s a fair question but a delicate one. In one corner is your second husband who has been living with you in your house for 30 years. So, the title might remain in your name alone, but you have been married and he has lived there for 30 years; presumably contributing to the costs of keeping the place and perhaps even the costs of raising the kids sired by No. 1. In the other corner are those lovely kids you raised and who want to someday own a home and be free of financial worries. Ugh!

People like to think this way: “So I die, and the house is in my name, so it is part of my estate and I feel confident that my kids will come back from the funeral and say to my spouse that we need to reach a reasonable accommodation to have the house sold.” Her surviving spouse is thinking: “I lived here for 30 years and helped to pay the bills including the house bills, I should be able to stay here as long as I want. Those kids did not contribute a nickel to this house during the last three decades. Had I insisted the title be made joint, this would be my house… lock, stock and barrel.”

Let’s look at this difficult set of choices in a different framework. First, if you are the prospective decedent who owns this house and is married to this man, you need to recognize that your executor’s job is to turn your estate to cash and distribute the proceeds per the terms of your will. And if one of your kids is your executor, don’t be surprised if we tell you that your surviving spouse may be told to leave the house immediately once he returns from the cemetery.

Now, let’s go into the “cold world.” You draft your estate plan You have 3 kids. You decide that on your death the estate should be divided into four shares. One for each kid and one for your second spouse. To keep it simple, the estate is your now debt free house worth $600,000. Cost of sale is $36,000 leaving $564,000 to divide four ways or $188,000 per beneficiary before estate taxes are calculated.

Assume your second spouse of 30 years comes to see a lawyer while you are still living. That lawyer is probably going to ask: “What was the home equity 30 years ago. Your spouse says the house was worth $250,000 back then and there was a $100,000 mortgage still due. The equity then was $150,000. The equity today is $564,000. As lawyers we tell him that if he files for divorce, a court probably forces sale of the house and he gets $207,000 from that sale. That is, half the growth in the home equity since the second marriage.  23 Pa.C.S. 3501(a.1). Most states don’t give the second husband a cut of the increase, but Pennsylvania does.

What lawyers typically hear after presenting this analysis comes down to: “Look I am content with my marriage, and I don’t want to make waves and start a war at age 70. But I don’t want my wife’s kids to basically kick me to the door the day after we have a funeral.”

All valid. On our example it’s $188,000 to spouse through ¼ inheritance versus $207,000 equity in a 50/50 divorce. But the question often turns on the power dynamic. “I don’t want my stepson ordering me out of the house I have lived in for three decades.”

Many people planning an estate on these facts would confer to their surviving spouse a life estate in the home. Essentially it means the surviving spouse can stay in the house until he dies. Sounds nice but houses don’t come free. Who will pay the taxes? What if the furnace blows or the roof needs replacement. Surviving spouse says: “Not my roof. Not my problem.” The $600,000 house with a failed roof and no heat is now a $450,000 house because buyers don’t fancy acquiring these problems.

As the owner of the house and the homeowner spouse I have condemned to death in this example it would help if I offered the condemned some solutions. In Southeastern Pennsylvania a $600,000 house rents for $3,200. Were I doing the wife’s estate plan I would recommend these elements to her.

  1. Prevent any executor from evicting your surviving spouse from the residence for 90-180 days and provide that the executor covers the bills during the period you specify.
  2. Afford your surviving spouse the right to stay in the property after that 90-180 day period conditioned on his payment of fair rent based on the fair rental value. If no agreement is reached house goes to market.
  3. If/when the house is sold the surviving spouse gets the greater of (a) ¼ of the value after costs of sale or (b) half the increase in the equity from the date of marriage to the date the home is sold (less costs of sale). This signals to the surviving spouse that you understood he could have gotten more in a divorce than he would have received from your estate plan.

This may seem like a complex solution to a simple problem but all too often parents assume that their children love their longtime stepfather just like dad. Unfortunately, this writer has sat in a room where well educated 50 year old children have revealed their intense dislike for a stepparent for “destroying our family 40 years ago.” In the matter where those words were uttered their father had dementia that foreclosed any power on his part to respond. Our client did not want to divorce her elderly husband in the waning moments of his competency. We told her we saw no other path in a world where we believed his estate plan made little to no provision for her.

Your surviving spouse and your children deserve a reasonable path forward after your demise where your estate plan incorporates both. You need to blaze that path rather than allow hope of tranquility to outweigh expectation of conflict.