Your family home will probably be your most valuable asset in your estate after you pass away. I have written previous articles on clearing your mortgage early and the importance of having a debt-free home.
The big question I have for parents this month is….. what are your plans for the family home when you pass away?
Are you planning for the family home to be sold, and this can provide a valuable lump sum for your child’s Trust? I understand some parent are personally tied to the family home and may not want it ever sold. Unless you have substantial other assets, this might not be a wish in reality that can be granted.
When the family home is sold, what share is your child to receive into their Trust? An equal share with their siblings or a larger percentage enabling the Trust is better funded. If you have been reading my articles for a while, you know that I am always advocating the children with additional needs should inherit more than their siblings.
If your plan is for your child with additional needs to live in the family home for the rest of their life, selling the home is not an option that will work. Some parents have it stipulated in their Will that their child has a lifetime interest in the family home. In plain English, they are entitled to live in the family home until the child passes away, and nobody can force them to leave. This seems from the outside a great idea, but I generally tell my families to avoid these types of details in their Will and instead have it in their Letter of Wishes.
What makes sense in 2021, might be the worst thing you could do when 20/30-years later, your Trustees’ hands are tied because you made a decision you thought was going to protect your child. My preference is for your child’s percentage of the family home to be left to the Trust, and this will allow your Trustee to use their discretion and decide on your child’s living arrangement as they arise.
I have come across a situation where a child has a lifetime interest in the family home. The home is unsuitable for the child now that they are older, but the house can’t be sold because of the parents’ decision when they were alive.
I also had a zoom consultation recently with a couple, and their solicitor advised them to cut their child with special needs out of the family home. This couples Will stipulated the other siblings were to inherit the family dwelling and look out for their brother with Down syndrome. This is something I strongly argue against. It leaves the child with additional needs very vulnerable and financial dependant on other people, in-laws and other family members.
As with all planning, you need to have a clear plan in your head of what is happening to the family home when you pass away. I encourage you to think about having your most valuable asset available to your child’s Trust so it can have a significant impact on your child’s future.