By Quentin Fottrell, MarketWatch
My supersaver in-laws have two children. I married their oldest who is also quite good at saving; the other sibling, her sister, not so much. One of my in-laws has passed and the other, I fear, is not long for this world. The discussion of the will and assets has begun.
I’ve been told my spouse has a quitclaim deed for the home and the sibling for the vacation property. Right after, I was told that the will states everything is split down the middle. How can both be true? Which wins out, the will or quitclaim deeds?
Secondly, I fear co-owning anything with my spouse’s sibling as it will, sooner or later, given their track record, become our financial nightmare. I can retire now and will in a few years. I don’t want a vacation home that I do not enjoy hanging over my head during my retirement.
Of course, this place is very sentimental for my spouse and her whole family. This will be the third generation to own it. The first generation built it themselves. I’m hoping the quitclaim deed wins out and the sibling owns it outright.
As I rarely get my way, how can I change that and protect what I worked decades for from this potential fiasco?
Son-in-Law in Michigan
It’s a nice problem to have.
But you’re right: vacation properties can be expensive to maintain, stressful to manage, and can be difficult to sell. If you feel confident about your retirement, and don’t wish to become embroiled in a project where one person may or may not pull their weight, sort it out now rather than later.
You are taking the smart approach by figuring this out now, before your wife’s parent passes away. Bravo! There’s nothing worse than an unwanted vacation home becoming the topic of conversation at dinner tables for years, like a giant bedbug that refuses to be exterminated.
If this property is transferred by quitclaim to your wife and/or your wife’s sister, it will override the will and not go through probate. However, if you decide to sell the property, you will have to pay tax on the increase in the value since your in-laws first built it and/or purchased the land.
<STRONG /> Your sister-in-law may not be happy with receiving the vacation home if there’s another, more valuable home that goes to your wife. Assuming your wife is in agreement and the rest of the assets are split 50/50, you can save yourself the trouble of managing the property.
Now a warning : This does not preclude your sister-in-law asking for help or getting into financial trouble that requires selling her vacation home. If you give up complete control, be prepared — in a worst-case scenario — to see the property sold, and lost for future generations to enjoy.
Kimberly Hanlon and Sommer Spector Angstman, co-founders of Lucere Legal in Minneapolis, Minn., advise caution. Quitclaims are non-revocable. They say a transfer on death deed is often preferable, and also prevents the parent being exposed to the folly of their children.
“The relationship with the kids could go south and the kids could literally evict the parents because they are no longer owners of the home. Also, the kids’ creditors can put a lien on the house and foreclose, forcing the parents to pay off the lien or move,” they say.
Remember that there are times, like a global public-health emergency, when vacation homes that once seemed tired, tiresome and inconvenient, suddenly appear as appealing as if they were made of candy and gingerbread, with gummy bears in the garden to welcome you home.
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