Question: I have a wonderful, loving wife, but she’s terrible with finances. She has no interest and no matter how much I ask her to at least know the basics of our finances, she resists. I fear that if I am the first to leave, she could be exploited and lose everything. Should I just describe everything to him and hope for the best?
To respond: It probably won’t surprise you to know that we get this question all the time. Couples bring their strengths to relationships along with their weaknesses. Let’s hope that between the two people, everything is properly settled. In my marriage, if I was “the first to go”, my husband would probably be at a loss when it came to finances. Not that he can’t handle it, just that I managed the finances of our three-decade marriage while he handles everything else! So I, too, fear that someone might take everything we’ve worked hard to build.
Leaving an outline is a good start. Also consider entrusting your spouse with a good financial planner or trusted money manager. If you have a trust and you have appointed a trustee to intervene after your death, you could ask this trustee to help your spouse if you die first. This not only means that she will have someone she trusts to help her, but your fiduciary will then become familiar with your financial situation and will be in a better position to take over when the time comes.
Question: You wrote in a recent column that a trustee cannot buy assets from an estate and that a court can void such a sale. My parents’ confidence tells me that I can buy their house and that I will be the trustee. Won’t it hold up when the time comes?
To respond: Great question and I appreciate your request. Trust agreements are wonderful documents in that we can state exactly how we want our real estate to be treated as long as it is not illegal or contrary to public order. For example, if a trust said something like, “I’ll give my son $1 million if he divorces his wife,” that’s against public order and wouldn’t hold. Likewise, if a trust says, “I leave my daughter half of my estate as long as she marries into our religion,” it could also be voided.
If your parents’ trust says you can buy their house, you should be fine. It would be nice if the trust gave some additional instructions like you can buy the house for its appraised value, or you can buy it at a discount of 7% (the usual cost of selling a property through a real estate agent if you consider the company’s commission and title fees). The missing language that allows a trustee to purchase property from a trust, other beneficiaries could challenge the purchase and a court can void such a sale. In either case, whether a trust gives permission to a trustee or a trustee is interested in buying something from the trust, the trustee should work with a lawyer to obtain court approval, if necessary, or to at the very least provide full disclosure to the other beneficiaries of the contemplated purchase. By doing either of these things, a trustee buyout can work well.
Liza Horvath has over 30 years of experience in the areas of estate planning and trusts and is a licensed professional trustee. Liza is currently President of Monterey Trust Management. It is not legal or tax advice. If you have a question, call (831) 646-5262 or email [email protected]