This Week's Q & A

Q: My wife and I are in our early ‘70s and own our home free and clear. We have several children, the youngest of whom is severely retarded and cannot live independently. We expect that our youngest daughter, who is single, will take care of him when we are no longer able to do so. With that thought in mind, we plan to leave our house to her. (We have other assets, which will be divided among our other children.) My question is, should we simply specify in our will that the house goes to our youngest daughter, or would it be wiser to add her name to the deed now?

A: Your question raises a host of tax and estate planning issues that you should consider, with the help of an accountant or an attorney specializing in this area. But before you get to the tax issues, I think you should take a much closer look at your goals and your assumptions. Your primary goal, obviously, is to ensure adequate and continuing care for a child who will not be able to care for himself. And you are assuming that your youngest daughter will provide that care. At risk of raising an obvious question, I have to ask – have you discussed this with your daughter, and does she share your vision of her future?

You indicated that she currently is single, implying that she is, therefore, better able to assume responsibility for her sibling. That may (or may not) be true today, but it won’t necessarily be true forever. What if she marries and/or has children in the future? What if she moves to another area, or gets sick? Or what if she accepts this arrangement initially, but decides at some point that she is unable, or unwilling, to handle it any longer? Should she have such a change of heart, there is nothing to prevent her from keeping the house she has inherited (or been given) and making alternative arrangements for the care of your son – arrangements which may not be consistent with what you would want for him.

I intend no criticism of your daughter; she may be perfectly comfortable with the arrangement you have outlined. But circumstances and people can change. If you’re trying to ensure that your handicapped child will be cared for in your home, leaving the property to your daughter, or to anyone else, for that matter, isn’t necessarily the best means of achieving that goal.

The attorneys I consulted suggested that, as an alternative, you might want to consider establishing a trust, which you would designate as the recipient of your house upon your death. The terms of the trust could specify that your son must be cared for in the house and that the designated caretaker – your daughter or anyone else who assumes that responsibility in the future – will be able to live in the house only as long as they care for your child. This way, if your daughter decides at some point to abandon her caretaking obligation, she won’t be able to take your house with her.

While a trust may turn out to be a viable solution for you, it must be drafted carefully to achieve your goals. And it should anticipate myriad contingencies. For example, it is fine for the trust to specify that your child must be cared for in your home, but the language also should indicate acceptable alternatives if, for example, the neighborhood becomes unsafe or your child requires care that can’t be provided effectively in your home, or if the arrangement becomes economically unfeasible. Whether you eventually decide on a trust or some other vehicle to provide ongoing care for your child, you should plan on consulting an attorney who specializes in estate planning. Mistakes in this area can create massive problems, which often are both painful and extremely difficult to correct.