Using A Right Of Occupancy Trust

Many of us have or expect to have real property as part of our estate, to leave to our loved ones. And those loved ones, once they inherit, have the right to do what they want with the property that you leave them. But what if you don’t want that to happen?

What if you want loved ones to inherit your home…but you want to make sure that someone (a family member or otherwise) can remain living in the home?

The Right of Occupancy Trust

There is a way to do that through what is known as a right of occupancy trust. As the name implies, this is a trust that designates someone who is allowed to live in the property, for as long as you designate, and that person may or may not be (but usually isn’t), the legal owner, and may not have even inherited the property or have an interest in it (other than being able to live there).

Of course, living in the property means the property can’t be sold, which means it has to be maintained, along with all the expenses that come with that. Things like mortgage payments, insurances, taxes, HOA dues, and maintenance, all will need to be budgeted for in your estate plan, to allow the designated person to live in the home.

Setting the Rules

Depending on who is living there, you may want to set terms and conditions for their residency, the same way that a traditional lease agreement would do. However, the occupancy trust would normally not require the occupant to pay any kind of rent. You can require the occupant to pay things like maintenance or upkeep.

You can also condition living there on life events—for example, you could say that occupancy will only be until someone graduates college, or until they get married.

You can even designate property as being occupied for only part of the year—for example, if you wanted to give someone the right to live in the property as a snowbird, or as a vacation home.

Why Use the Trust?

These trusts can be a good way to take care of multiple people, especially when there are children of a prior marriage. You can allow your current spouse to live in the home, either for a set period of time, or indefinitely until death, and then, as the legal owners of the property, your children would have the right to do what they want with the property.

Occupancy trusts can also be good for beneficiaries that may be disabled, or unable to care for themselves.

Note that many laws protect spouses and minors, and allow them to inherit property, regardless of what is in a will. So, a right of occupancy isn’t always necessary, but in certain cases, it can be a valuable estate planning tool.

Need an estate plan that takes care of your loved ones? We can help. Call the Torrance will and estate attorneys at Samuel Ford Law today.

Sources:

trustandwill.com/learn/right-of-occupancy

thelaw.com/threads/inherited-property-lifetime-right-of-occupancy-title-property-tax-questions.64982/