My friend, 78, owns a house with his girlfriend, 68. As executor, should I convince him to split his estate 50/50 with his only child from a previous relationship?

08/05/2024

Dear Quentin,

My friend “Bob” and I have been close friends for 40 years and I am the executor of his will. He is 78 and in declining health. Although not a college-educated professional, he worked very hard at a physically challenging job and was a diligent saver.

Bob lives with his lady companion of 20 years in a house they purchased together, each contributing 50% of the purchase price and 50% of the taxes and upkeep. She is 68 and in good health, with a real-estate broker’s license and is a non-practicing CPA.

They purchased their house for $360,000, and it is now valued at nearly $700,000. He would like to downsize to a condo due to his health, but she is reluctant as she has custody of two grandchildren (ages 8 and 13 who live with them).

Bob has a daughter from a previous marriage, three grandchildren and three great-grandchildren. He has about $500,000 in retirement savings, and relatively liquid assets, but his equity in their home is his largest single asset.

They own the house as joint tenants with the right of survivorship. Bob has repeatedly told me that if either one of them should die that the other could live in the house (paying the taxes and expenses) until such time as the house was sold.

Questioning her honesty

When the house is sold the proceeds would then be split between his estate and hers equally (she has two daughters). His estate is currently to be distributed to his daughter (60%) and his grandchildren (40%).

The problem is that the house sale and proceeds-distribution agreement is not in writing. Several times he has come close to having a lawyer draft an agreement that they both would sign detailing what has been agreed upon.

However, when the time comes to make the decision he backs out. He’s afraid to upset her and feels that presenting such an agreement would be construed as questioning her honesty and might ultimately affect their relationship.

I have tried to convince him that such an agreement would protect them both and that if by some rare circumstance she predeceases him, or they died together as the result of an accident, it would lay out their wishes in a clear fashion.

If he were to pass and she doesn’t relay the agreement to her daughters they would have no way of knowing what was agreed to and, given that no one else knows, his descendants would be left out.

I have a clear picture of the value and difference his financial agreement could make in the lives of his daughter, grandchildren and great grandchildren. It would literally change their opportunities in life and possibly break the cycle of poverty that they struggle with.

Should I push this or just back off, and let the cards fall where they may?

A Concerned Executor

Dear Executor,

Be careful not to overstep your boundaries.

Bob is afraid of hurting his partner’s feelings. He is not, from your letter, afraid of her for any nefarious reasons. She is not abusive and, let’s assume without evidence to the contrary, that she is not exercising coercive control over Bob.

She is, on the other hand, a committed partner who is raising her own two grandchildren in their home and, because of that, is not in a position to move to a condo. She is a long way from qualifying for the Moneyist Monster Hall of Fame (if such a thing existed).

There are a lot of interested parties here, and they all have different opinions and/or agendas: Bob, his partner of 20 years, his children and grandchildren and, of course, your good self. But the only thing that matters here is what Bob wants.

If Bob predeceases his partner, his share of the house would automatically revert to this partner, given that they have joint tenants with the right of survivorship (not to be confused with community tenants with the right of survivorship for married couples).

Changing ownership

But it may be possible for your friend in a less-than-ideal world — to ensure that half of this house goes to his children and grandchildren — to sever the joint tenancy without the consent of his partner. (Laws as they relate to JTWROS vary by state.)

Typically, one owner can sever the joint tenancy without the consent of the other by transferring their interest to a third party, a trust, or recording a deed to that effect, says Burner Prudenti Law in New York. “This turns the JTWROS into a tenancy in common.”

If one owner wants to sell, it probably requires consent of both joint tenants. If there is a disagreement about the sale, one party would have to file a partition action. “If one owner insists on selling, the court is likely to order a partition sale,” the law firm adds.

With the help of a lawyer, and depending on what state he lives in, he could change the kind of ownership they share and stipulate in his will that the house may not be sold until his partner of 20 years dies first. Then it could be split 50/50.

Tread carefully

That seems fair to you, since they both contributed to the down payment, mortgage and upkeep. But what seems fair to you, the executor of his estate, may not seem fair to his partner. If they were married, the property would be community property.

Generally, it’s a bad idea to leave assets and/or separate property to a partner or a spouse with the understanding that they will carry out your wishes. Whatever they decide, it would be honorable to do so together and not go behind the other’s back.

Harsh as this may sound, you are the executor of his will. You are his friend, sure, but you are not his attorney, and it is your fiduciary duty to carry out the terms of his will, and act in his best interest, not in the best interests of his children or grandchildren.

Tread carefully. An executor may not put their interests over those of the beneficiaries, misappropriate or mishandle estate assets, favor one beneficiary over another or pay themselves without court approval, the Keystone Law Group in Los Angeles says.

Thankless job

It can be a thankless job — any fees notwithstanding — and should the beneficiary (Bob’s partner) or beneficiaries (anyone else mentioned in his will, such as his children or grandchildren) suspect a breach of duty, they can make a claim against you.

If beneficiaries won, “the executor could be held liable for paying damages from their own pockets for their executor misconduct,” Keystone adds. (An administrator would be appointed if someone dies without a will or the executor is replaced.)

There are other, simpler decisions to ensure his daughter and her children and grandchildren are looked after when he dies. He can make sure that he names them as beneficiaries on his accounts. (If they were married, this would be trickier.)

He could change the beneficiary on his checking account, life insurance, 401(k) or IRA. Bob could even leave his daughter and his grandchildren the equivalent of 50% of the value of his home if he wished. Either way, you have said your piece.

Let the proverbial cards fall where they may.

Other resources for people with family members with addiction issues: The Center for Motivation and Change published this book, “Beyond Addiction: How Science and Kindness Help People Change.” by Robert Meyers, who has been working in the field for four decades.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

‘He’s holding all the cards’: My mother, 86, has dementia. Her partner of 30 years is on the deed to her home. How can I gain control of her finances?

‘I live in a slum’: My ex-husband knocked down, then rebuilt my home and left it in foreclosure. Now he refuses to pay alimony.

‘I see my greedy in-laws as misogynists’: I was a stockbroker in the 1980s and always kept my money separate from my husband’s. Is such self-protection justified?

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