I am 62 years old. For most of my adult life, I lived in poverty and was a single parent. I became a nurse at 47 and bought a house. I had a fiancé who put me in debt of $16,000 when we broke up, and I paid that off over time.
When my current husband and I got together, “we” bought an expensive motorcycle, four-wheelers, guns, an extra car and stuff along those lines until I finally set foot in earth. I do three times what he does. My goal is to pay for my house so I can retire in the next few years.
My husband has always been bad with money. He even sold an old property he owned before we met and made a large sum of money, but quit his job, traveled and bought things for about a year until all the money was gone. left. He had a lifetime of fun and extras. I, on the other hand, struggled horribly.
I’m about to make a will. I have a pension. If I died first, my husband would have excellent health insurance taken out of the pension and would get a little money every month, but not a lot of extra money. I don’t want to leave my/our house to my husband. I believe he will sell it and spend the money on the trip or mortgage it upside down and spend the money recklessly. I want to leave it to my children and, possibly, a part to his.
I want to leave him a life estate in the house so he can live there forever, but he will have to pay taxes and insurance and maintain the house. He is very handy and it would not be a problem for him to do the maintenance of the house. He has many friends who would help him if needed. His mother asked what would happen to the house once. When I told her that, she had a fit. She thinks I should just let him do whatever he wants.
I also have a father who is wealthy. When he passes, I’ll probably inherit between $200,000 and $400,000 which I fully intend to keep separate, although I’ll spend some on my husband, I’m sure. I will leave nothing to him, but only for my children. I don’t want my husband to be hurt, but I want to be able to leave my children in a better place.
He’s not afraid to leave anything to his kids, and I know he’d spend every penny on himself. My husband worked a lot in our house, not alone, but alongside me. That’s why I want to include his sons in the inheritance of the house. Do you think that sounds reasonable?
-T.
Dear T,
Maybe your husband will be hurt by your decision, but I wouldn’t waste too much time feeling sorry for him. He reaped the fruits of your success. If you die first, he will always have a house, health insurance and a modest income from your pension.
A person whose opinion is irrelevant: your mother-in-law. If she thinks your husband is entitled to an inheritance, she can do so with her own estate plan.
Ask dear Penny!
Get practical financial advice from Robin Hartill, the voice of Dear Penny and a Certified Financial Planner.
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Of course, you must consult an estate planning lawyer. But your plan to create a life estate seems solid. With a life estate, even if you die first, your husband could live in your home until he dies. Upon his death, the house would automatically pass to your heirs – known as the remnants – and bypass probate.
It seems that you have managed to get through financial conflicts in the past if you put an end to your husband’s habit of buying expensive toys. But you don’t necessarily need to talk about his reckless spending. There’s nothing wrong with your husband wanting to spend all the money he has in his life, but your priority is to leave a legacy for your children (and possibly his own). Using a life estate for your home and separating your inheritance is the best way to do this.
But if you’re really worried about your husband getting hurt, focus on the practical considerations. Although your husband would end up with great health insurance if you died first, most private insurers don’t cover long-term care. Neither does health insurance. A person turning 65 today has about a 70% chance of needing long-term care, and many will need Medicaid to pay for it. A life estate is a common tool people use to protect their home from Medicaid estate collection upon their death.
You lifted yourself out of poverty through your own courage. You shouldn’t feel guilty about your plan. It’s only reasonable to leave your hard-earned assets to your children rather than a husband who would probably squander everything you worked for.
Robin Hartill is a Certified Financial Planner and Senior Writer at The Penny Hoarder. Send your tricky money questions to [email protected].