Should You Put Your New Spouse’s Name on the Deed to Your Home?
People who remarry after divorce or the passing of a spouse often choose to move into a home that one of them already owns. One of the most common questions we discuss with clients is whether to change the deed to their home to add the name of their new spouse. It seems simple but in reality, it’s a question that raises some complicated issues.
Reasons to Add Your New Spouse to the Deed
We hear many reasons for adding a new spouse to a deed. Two of the most common include:
To simply the passage of ownership and avoid the costs and delays of probate
To ensure that the new spouse can remain in the home in the event of death of the owner
Changing the deed is a solution to these challenges but the consequences are often overlooked.
Divorce
By adding your new spouse to the deed, the entire value of the home becomes a marital asset subject to division in the event you divorce. You will not necessarily get to “protect” the value of the home that you brought to the marriage after doing this. When the deed is not changed, only the appreciation in value of the home from the date of marriage is a marital asset subject to division. This could be a big mistake.
Death
Your spouse will become the owner of your home after you die when you add their name to the deed. If you have children from a prior relationship, they will not be entitled to the proceeds of the later sale of the home. Your new spouse has no legal obligation to convey the home to your children or include them in their Will. In short, your kids will not be entitled to any portion of the home’s value.
Disagreement
Once you add your spouse to your deed, you are no longer in control of your home. You will need their consent to do anything with the home, including obtaining a mortgage or selling the home. In the event of a separation or divorce, your property could be tied up for years.
The Better Way Than Changing the Deed
There is a way to have your cake and eat it too. We recommend using a revocable living trust. You would convey ownership of your home to the trust and in the event you become disabled or pass away, the provisions of the trust relating to the house would become “irrevocable”. By conveying ownership of your home to a trust, you can accomplish the following:
Maintain ownership of the home and expose only the appreciation in value to division in the event of a divorce proceeding.
Protect your spouse’s right to remain in the house in the event you become disabled and move to senior living or if you pass away. The trust can oblige your spouse to maintain the home and pay its expenses as a condition to the right to remain there. Establishing clear guidelines on what the surviving spouse covers versus what the estate of the predeceased spouse handles can prevent future disputes. You can even hold money in the trust to help your spouse with home-related expenses. In the event your spouse fails in that regard, the trust can provide that the home would be sold and provide a process for accomplishing all of those tasks.
You can give your spouse an option to purchase the home after your death. You can decide on how the purchase price will be determined, even giving your spouse a “discount” to make it easier for them to retain the home. The proceeds can be reserved to benefit your children from a prior relationship.
Ensure that the home will not prevent your spouse from qualifying for government benefits to pay for nursing care in the event the need arises. The cost of nursing care is over $12,000 a month. The trust can be a powerful asset protection tool for your surviving spouse and ensure a legacy for your children.
Protect the home against creditors of your spouse or children. In the event your family has debt problems, no creditor will be able to get to your home to satisfy those debts. The trust will serve as a “lockbox” protected from creditor claims.
Provide a legacy for your children. Once your spouse is no longer in the home, either by death, remarriage or moving into senior care, the home can be sold and proceeds divided among your children.
You can That choice raises additional questions about the long-term decisions involving the home in the event of divorce, disability or death. Your home is often your most valuable asset so it’s crucial to address how the home should be handled in the event of disability or death of the owning spouse after remarriage.
Navigating remarriage after divorce or the loss of a spouse can be complicated. Thoughtful planning is essential to resolve home ownership rights effectively and prevent potential conflicts down the road.