If a house is owned by one person, and they die and leave the house to their spouse, can the spouse continue living there and gain ownership without any interruptions or problems? (If not, the spouse should probably get added to the deed.)
If a house is owned by two people, both names on the deed, can one of them borrow money using the house as collateral without permission from or knowledge of the other person?
This is Maryland, and the mortgage is long paid off, no other liens.
We’re going to be working all of this through with a lawyer, so no decisions are riding on any opinions offered here. I’m just doing some homework to anticipate what we will have to discuss together.
Not in Ohio. Even if the deed and mortgage is only for one person, any additional financing is required to notify the other spouse. When I refinanced my wife had to basically give permission.
How did the house come to be in just the name of one spouse? Was this a house the spouse owned prior to the marriage? Or was it a house they bought together after marriage but just one spouse was on the deed?
When you say “leave the house to their spouse”, what exactly do you mean?
In many states you can file a transfer on death deed (sometimes called a “beneficiary deed”) which means the house continues to belong solely to the current person until their death, then instantly transfers to the named other person with no probate or estate complications.
In the alternative, if the house is willed to the other person / spouse, the house will be in legal limbo from the moment the owner dies until their probate estate is settled. Which is months to a year assuming the estate is not hugely, complex, valuable, or controversial.
Laws vary by state, but at a high level, there are several different ways in which real property may be jointly titled. In some of those ways one owner can do more or less stuff without the other’s knowledge or consent versus some of the other ways the property may be titled. It’s not as simple as “add them to the deed”.
A separate wrinkle is that everything is different in a community property state versus a non-community property state. I don’t recall which flavor Maryland is, but that’s one of the fundamental questions to know the answer to. Damn near every other conceivable question hinges on this one.
There is no doubt that having both people on the deed will make life much easier on the survivor. If they are not on the deed then it goes through probate court. Whether the survivor can continue to live there I do not know…especially if they are not named as the owner of the property in the will (which can be contested).
If there are two people on the deed I am not sure about what loans can be had. I would think either person could apply for a credit card without the other person knowing/approving of it. But, if one person wanted a loan using the house as collateral I would think any bank would need both people on the deed to sign off on that. I am not sure there are rules or regulations governing this but lenders want to be sure they are the first in line in case you default on the loan and someone else on the deed complicates that.
IANAAccountant/laywer. Best to talk to them about such things if needed.
I’m wondering if there might be a difference between what is legally optimal and what is effective and practical. I’m not sure who would have a clearer ostensible interest in the home over an ex-spouse who had been living there and was named in the will.
So, yeah, they could title the property better. But as long as the surviving spouse stays put and pays the mortgage, taxes, etc, who is going to kick her out before the will gets probated?
When you say “owned by one person”, I assume you mean there is no trust involved? If you set up a trust and the house is owned by the trust, the post mortem transfer becomes easier. Pretty much everything involved in an estate becomes easier if a trust is set up. If the estate is large enough that a house is part of it, I think it would be highly desirable for the owner to set up a trust for the estate.
One spouse owned the house before marriage. (But it was refinanced multiple times during the marriage, never involving the other house, and there were settlements or proceedings for each of these refinances; don’t know if that matters.)
“No, Maryland is not a community property state; it follows an equitable distribution system for dividing marital property during a divorce. This means that property is divided fairly, but not necessarily equally, based on various factors.” -AI answer to web search
Oh, I didn’t know there were multiple options. I was thinking the will would say that the house goes to the other spouse. If “beneficiary deeds” like you mention are available here, that sounds much better.
Well, I’m dancing around some problematic history here, so I’ll go ahead and say it. The other spouse went through a financial problem, maxing out multiple credit cards and being unable to meet minimum payments, so they tried to take out a home equity loan, but didn’t get anywhere because their name wasn’t on the deed. This scares the hell out of me. If they had been able to borrow against the house, they could have dug a much bigger hole and perhaps even lost the house. I want to make sure that can never happen. But I’d also prefer to avoid the cringeworthy discussion between both spouses and a lawyer about this specific issue, which also scares me (though not as much). Their credit card debt I don’t think I can avoid, and I may be responsible for it (however much it is now), but I doubt lenders would lend then more money than I could afford to lose if they die.
Correct, there isn’t a trust. Though, I could have one set up if it accomplishes the right things.
It really seems worth your time and some money to consult an estate attorney and get this all sorted out to your satisfaction. They should know all the angles and be able to set things up to protect you and your heirs as you see fit.
I’m a little confused here - if the spouse is not on the deed and the house is not left to the spouse in the will , there is absolutely no reason to expect the spouse can stay, except maybe in a community property state.
I think Dinsdale was talking about the practical effect of putting the spouse on the deed now vs. naming the spouse in the will - I don’t see how a child is going to contest the will and kick out the spouse who was named in the will before probate.
If I own a house in my name alone, and I leave it to my kids in my will, I’m sure they can kick my husband out , although I’m not certain they can do it before probate. But that’s a very different situation than one in which I leave the house to my husband in the will - if my kids could kick him out under those circumstances, then so could you. They don’t have any right to inherit from me if they aren’t named in my will.
There may also be something known as “Right of Survivorship” or something like that whereby the surviving spouse not listed on the deed is granted the right to live in the house until they die or decide to leave. My father had set that up for my stepmom before he died. That was in Louisiana. My wife and I also did something similar here in Tennessee since she already owned the house outright before we married but I have invested at least as much as she paid for it doing repairs and remodeling. Since we both have children from other marriages, we have made legal arrangements via an attorney so that regardless of who dies first, the other can stay in the house until they die, then the property gets split 50% to her heirs and 50% to mine.
The heirs don’t take on the debts of the deceased. The estate has to pay those debts. The cash and assets of the estate will be used to pay off any debts. That may mean the house is sold and the proceeds used to pay off the debt. If there are still remaining debts after the estate has been liquidated, then the debt holders are out of luck. The relatives and heirs have no responsibility to pay off any remaining debt.
Napier is alive now. His spouse has run up huge CC debts now. He’s concerned about attaching her to the house deed so she can run up even more debt in the immediate future and jeopardize the house. Or so current creditors can go after the house for current debts.
He’s thinking he’s stuck paying her current debts. He’s probably thinking rightly. Certainly as a practical matter if not as a strictly legal matter. And maybe even as a strictly legal matter.
The periodic mentions of “community property” (or not) are a bit of a red herring. Assuming there is no will or other instrument governing the transfer of property (such as the aforementioned transfer on death deed), I suspect just about every (possibly without exception) jurisdiction in the US would transfer ownership of all property to a surviving spouse under the jurisdiction’s laws of intestacy (intestacy being what happens when you die without a will or “testament”). Then it’s just a matter of having the estate probated (in a court that deals with the distribution of property after the owner’s death). Quite possibly with any debts attached to the home being assumed by the new owner as a condition of assuming ownership.
But the nice thing about a transfer on death deed, at least in Texas, is that it happens automatically and keeps the home out of probate. Joint title between spouses might achieve the same end. I say might because, well, IANA(MD)L and this is not legal advice.
FWIW, I am in a similar situation. I owned my house free and clear before I met my current wife. But I have a trust and the house is actually owned by the trust. I of course don’t know exactly how it will play out if I die first (and will never know), but when I updated the trust I explained my intent to my lawyer, that my wife should be able to continue to live in the house without interruptions or problems, and should be able to sell the house after my death if she chooses to do so. The trust is supposedly set up to allow all that to happen.
The intestate provisions in NY do not leave everything to a surviving spouse if there are children. The spouse gets the first $50k and anything left is split 50% to the spouse and 50% to the children.